www.sukuk.com Following the UK government debut Sovereign Sukuk announcement late last year; European Sukuk activity continued as Luxembourg announced it too intended an issuance of a debut Sukuk of equivalent 200 million EURO's. Both Luxembourg and London are attempting to position themselves as key European based Islamic Finance centres and both Government's are eager to win the crown of being the first Western European Sovereign to issue Sukuk. Luxembourg has established itself as a major Islamic Finance player with multiple International listed Sukuk on the Luxemburg Stock Exchange, as well as the Central Bank being a founding member of the Kuala Lumpur based International Islamic Liquidity Management Corporation, an international institution established to facilitate effective cross-border Islamic liquidity management. In 2013 it was announced the intended establishment of the first Euroland Islamic Bank, Eurisbank, to be based in Luxembourg. In the UK, the London Stock Exchange has for some years been the leading global exchange to list Sukuk, whilst in the wider UK Islamic Finance market there are five established Islamic Banks focusing on retail and capital markets. Both the UK and Luxembourg Sukuk will likely be rated AAA. It is likely the UK Government Sukuk will be issued first as legislation to facilitate it is already in place, whilst in Luxembourg the legislation is currently passing through its parliament. Sukuk issuance are undergoing a renaissance after slower issuance's following the global financial crisis. In 2004, the German state of Saxony-Anhalt became the first European institution to issue a Sukuk when it issued a 100 million EURO sukuk. Turkey however became the first European country to issue a Sovereign Sukuk in 2012 with a $1.5 billion Sukuk which was rated Ba1 by Moody's, a rating considered non-investment grade, though the issuance was heavily over-subscribed receiving bids of $7.5 billion, something which allowed Turkey to achieve lower rates on the Sukuk than it gets on its conventional Bonds.

• published: 14 Jan 2014
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