CitiGroup has advised the Indonesian government not to issue Shariah bonds (also known as Sukuk) at this time due to adverse market conditions and the large number of bond issues in the global marketplace.

It is also interesting to note that CitiGroup also cited the “high yield” that Indonesia would have to set for the sukuk to attract investors, since sukuk shun interest in the first place. This is an example of the questionable and convoluted schemes that Shariah-Compliant products are often based upon–constructions which often appear meaningless when closely examined.

Issuers of sukuk might claim that they are without interest, but when a major market player does not issue sukuk because of the high yield that would be necessary to raise capital, the true nature of the bonds becomes thoroughly transparent.

http://www.antara.co.id/en/arc/2009/3/12/govt-advised-not-to-issue-sharia-bonds-now/

 

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