THE MONETARY Authority of Singapore (MAS) is in the final stages of setting up a sukuk (Islamic fixed-income securities) issuance facility to provide Shariah compliant regulatory assets to financial institutions as part of their efforts to promote the growth of Islamic finance in Singapore.

Speaking at the 15th World Islamic Banking Conference in Bahrain today, Heng Swee Keat, Managing Director of MAS said that the sukuk structure is based broadly on the Al-Ijarah structure, or the buying and leasing of an underlying property.

Sukuk issued by the facility will be given equal regulatory treatment as Singapore Government Securities (SGS) and returns will be tied to the risk-free yield of SGS of equivalent tenor or maturity.

Mr Heng said, "The facility is open to all financial institutions that plan to or are currently carrying out Shariah compliant financial services in Singapore. We are issuing on a reverse enquiry basis, which means we can size and time the issuance according to the needs of the financial institutions.

"A number of financial institutions have already expressed interest and we expect the first issue to take place at the start of next year."

This initiative was first announced at the 5th Islamic Financial Services Board Annual Summit held in Jordan in May 2008.