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NEWS UPDATES 26 October 2009

Brunei urged to sell sukuk, diversify investors base

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Brunei should sell sukuk overseas to widen the Islamic bonds' investor base, the Brunei Times quotes an Islamic finance expert as saying.

Limiting the sale of sukuk would make Brunei too dependent on the local market, said Dr Zeid Ayer, chief investment officer of CIMB-Principal Islamic Asset Management, at the recently-held Islamic Finance News Roadshow on Tuesday.

"I think that it is a disadvantage because (Brunei) should really open up globally, not just to diversify their investor base to global investors, but to also get a different investor base so that you are not solely dependent on the local market," he said.

He said there would be issues that need to be addressed, such as the denomination of the currency rate and allowing for the sukuk to be rated by independent ratings agencies (to indicate creditworthiness).

Ensuring the rating of Brunei sukuk by an external rating agency would create liquidity, Ayer said.

"If you have a different set of eyes, there would be different scrutiny, and someone who has looked at it would have a great track record for the company," he said.

He said that if a country also gets more issuers from other markets, then a market would be diversifying its own risks which would be a huge advantage to the global market.


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