Kazakh state bank plans $500 mln Islamic bond issue
* Devt Bank of Kazakhstan plans debut sukuk issue
* Says first Islamic bond issue for $200-300 mln
* No date for long-awaited $500 bln sukuk programme
ASTANA, March 30 (Reuters) - The state-owned Development Bank of Kazakhstan said on Friday it plans to issue Islamic bonds worth up to $500 million in a long-awaited debut issue to establish a sukuk benchmark for the former Soviet republic.
The first issue within the programme will comprise between $200 million and $300 million worth of Islamic bonds with a term of no less than five years, the bank said in a statement. It gave no details about when the issue would take place.
The bank said it was in talks with regulatory bodies in Kazakhstan to determine how the issue would be conducted.
Kazakhstan, where 70 percent of the 16.7 million population is Muslim, is a potential new market for the $1 trillion global Islamic finance industry, which is based on religious principles including bans on interest and pure monetary speculation.
Central Asia's largest economy and oil producer, the country has long planned a $500 million debut sovereign sukuk issue. Ministers have said the timing would depend on market conditions and amendments to Islamic finance laws in parliament.
The global sukuk market is believed to total about $50 billion, roughly 1 percent of global bond issuance. Though tiny compared with conventional finance and its tens of trillions of dollars, Islamic finance is seen by some investors as a safer, more stable alternative.
The Development Bank of Kazakhstan said finance would be offered via the murabaha structure, through which the borrower essentially sells an asset to the lender to obtain funds and agrees to buy it back on a later date at a higher price.
The bank said the sukuk would be issued in accordance with the laws of Malaysia, the world's largest market for Islamic bonds.
Al Hilal, owned by the government of Abu Dhabi, was the first Islamic bank to open in Kazakhstan when the country passed new laws in 2009 to allow an Islamic finance industry. The bank opened its Kazakh offices in March 2010. (Reporting by Raushan Nurshayeva; Writing by Robin Paxton; Editing by Catherine Evans)