Basel III Creates New Opportunities for Sukuk (Islamic Bond) Issuance

We think Basel III and the rules proposed by the IFSB based on Basel III will affect the global sukuk (Islamic bond) market as follows:1. The possibility of increased domestic and international issuance by Islamic banks of sukuk that can be counted toward capital so as to meet the increase in capital adequacy ratios relative to Basel II. 2. The possibility of an increase in the issuance of sukuk by highly rated governments and companies aimed at meeting the increased demand for investing in investment-grade sukuk from Islamic banks trying to meet Basel III liquidity requirements. 3. The possibility of a decline in the cost of sukuk issuance via standardization made possible by legislative (including tax law) and regulatory reform in Islamic and non-Islamic countries aimed at facilitating sukuk issuance