Brunei's Latest Debts

I saw Reuters picked up on our Ministry of Finance's press release on the latest issuance of sukuk:-

KUALA LUMPUR, June 23 (Reuters) - Brunei has sold B$28 million ($20.5 million) of 91-day Islamic bonds at a yield of 0.88 percent, the government said.

The issue, which matures on Sept 18, is the 14th sale of short-term Islamic securities based on the "ijarah" or leasing arrangement.

With this issue, Brunei has so far sold B$1.1 billion worth of short-term Islamic bonds since its maiden offering in April 2006, the government said in a statement sent out on Monday.

Oil-rich Brunei is flush with cash but is issuing debt to build a market to become a regional hub in Islamic finance.

Islamic bonds do not pay interest, which is banned as usury under Islamic law, and are structured as profit-sharing or rental agreements underpinned by physical asset. ($1 = 1.36 Brunei dollars) (Reporting by Soo Ai Peng; Editing by Lincoln Feast)

If some of you are going "huh??!" why the government is issuing public debt, you may want to read about sukuk. I wrote about the first issuance of Brunei's sukuk when I was still at MOF way back in March 2006 here.


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