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March 28, 2009

Thailand to issue first Islamic bonds
State-owned Islamic Bank of Thailand will issue the country's first Islamic bond in a plan to raise funds for expansion, its president was quoted by Reuters as saying Friday.

The bank will sell 200 million ringgit ($55.42 million) of mudaraba bonds in neighbouring Malaysia, Dheerasak Suwannayos said.

"It is just to test the market," Dheerasak told Reuters by telephone. "Thailand has never issued anything in Islamic bonds before. I think we will start to work on it after April."

Mudaraba is a structure where a bank will provide capital for a project while the entrepreneur will manage the deal. Profits are split according to a pre-determined ratio and the bank will bear any monetary losses that arise.

The bank has appointed Zaid Ibrahim, a Malaysian law firm, as its legal adviser for the deal but has yet to select a bank, Dheerasak said.

He said Islamic Bank of Thailand may pick Malaysia's second largest lender CIMB Bank, the world's top arranger of Islamic bonds, to handle the deal.


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