The global market for sukuk – or Islamic debt securities – has soared from a tiny US$15 billion in 2001 to US$281 billion in 2013. Helping issuers tap the large pool of funds seeking shari’ah-compliant investments would help lower the cost of financing infrastructure, while the innovative profit-sharing structures of some sukuk could also lower the risk of financing such projects.
Thiam Hee Ng
Thiam Hee does research on economics and regional cooperation issues in Southeast Asia. Previously, he worked on strategic planning, financial integration, macroeconomic surveillance, and early warning systems. He also managed the Asian Bonds Online web portal and the Asia Bond Monitor, a quarterly report on local currency bond market developments in Asia. Prior to joining ADB, he worked for UNIDO and the Central Bank of Malaysia.
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Last Friday, 7 March, 2014, Shanghai Chaori Solar Energy Science and Technology Co Ltd defaulted on its 1 billion yuan ’Chaori-11 bond‘ when it failed to pay in full the coupon due that day. The default should not have taken investors by surprise as the company has been struggling over the past few years due to general weakness in the solar panel market.
2014 is shaping up to be another challenging year for bond markets in Asia after a see-saw 2013 which saw prices rise at the start of the year, and then fall back on news that the US Federal Reserve plans to reduce or ‘taper’ its quantitative easing operations.