The Palestine Monetary Authority plans to issue its first ever Islamic bond, worth US$50 million (Dh184m), by the end of the current quarter.
Palestine to issue $50m bond
The Palestine Monetary Authority plans to issue its first Islamic bond, worth US$50 million (Dh183.6m), by the end of the quarter, says its governor.
Delays to the sukuk receiving approval under Sharia law pushed back the issue from its original time frame of April.
"It is testing the market and it will be a useful instrument," Jihad al Wazir, the governor of the authority, said in Abu Dhabi yesterday.
"If we can speed it up considering the political situation, the end of this quarter would be a good time frame." The authority hopes to deepen its financial markets as it seeks to increase flexibility within the banking system. It controls 18 banks in the Palestine territories.
"Investment vehicles are limited, so it will act also as an instrument that could be used between the banks to increase the flexibility in the interbank market," Mr al Wazir said.
The authority expects more debt issues in the coming months as it seeks to securitise its existing debt burden. Existing public debt stands at about $970m, Mr al Wazir said.
The latest issue will be denominated in US dollars, with a tenor of five years. It would be based on the ijara concept, which involves a transfer of assets, usually property.
Mr al Wazir said Palestine's $7.5 billion economy expanded by 11.3 per cent last year. In recent years it has benefited from increasing financial donations from the West and better security.
"We expect a slight decline because of the regional situation and Arab revolutions, which will affect investment and investors coming to the region," he said.
Regional unrest has curtailed investment flows in some economies this year as investors shy away from signs of trouble.
Uncertainty linked to Palestinian political elections this year would also potentially delay some investments, Mr al Wazir said.