IILM to issue first sukuk in six months, says Zeti

KUALA LUMPUR: The International Islamic Liquidity Management Corporation (IILM) is expected to issue its first sukuk in the next six months, as it will contribute to better liquidity management, says Bank Negara Malaysia (BNM) governor Tan Sri Dr Zeti Akhtar Aziz.

“We are about to get rated for the issuance short-term instruments and we are in the process of all the parameters as well as to get the allocation of high-quality underlying assets.

“This will be proposed to the governing board tomorrow and we hope they will approve the parameters for issuance,” she told the media at a roundtable meeting on the sidelines of the Islamic Financial Intelligence Summit (IFIS) 2011 here.

IILM was established this year to strengthen the liquidity management of Islamic financial institutions, with the collaboration of 10 central banks and two multilateral development institutions.

It aimed to enhance the availability of liquid syariah-based Islamic financial market instruments – a crucial step in promoting more efficient cross-border liquidity management for Islamic financial institutions to support increased cross-border flows.

The governor said all the primary dealers for Asia, Middle East and Europe would be appointed at the four-day IFIS meeting which started yesterday.

IILM was close to the issuance, she said adding that the initial issuance would be a relatively small one to test the system and its workings.

Zeti said subsequent regular issuances would be larger, in the region of US$2 billion to US$3 billion per issue in major currencies to cover the requirements.

“This is to meet the Islamic financial institutions but in our assessment, it will be high-quality short-term liquid instruments and therefore will probably be in demand in other funds managing portfolios, even conventional because it is another asset class that will be attractive as a liquid instrument,” she explained.

She said earlier, the attention was more focused on regulatory standards and capital adequacy measures.

“We saw during this crisis, liquidity has become an important issue, and with the internationalisation of Islamic finance, cross-border flows require short-term instruments to effectively manage, not only in stressful conditions but in normal times,” she said. — Bernama

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