* Sukuk rules would be part of capital market law
* Regulator wants to diversify funding sources
* Previous attempts delayed by politics, scholars’ concerns
By Ahmed Lotfy
CAIRO, Dec 13 (Reuters) - Egypt’s financial regulator will submit new rules to the government in January to facilitate issuance of sukuk, or Islamic bonds, as part of a capital market law, its chairman told Reuters.
The renewed push to allow sukuk in the country comes after previous attempts have been thwarted by nearly three years of political turmoil since the ouster of President Hosni Mubarak in February 2011.
Sukuk have grown in prominence as a funding tool beyond the industry’s core markets of the Middle East and southeast Asia, with the likes of Britain and Hong Kong considering sukuk issuance of their own.
“We are looking to submit a proposal to the government in the beginning of January to include rules regulating these financial instruments as a tool within the capital market law,” said Sherif Samy, chairman of the Egyptian Financial Supervisory Authority (EFSA).
The EFSA is keen to push for the introduction of sukuk to diversify funding sources and help further develop the country’s capital markets.
“The EFSA emphasizes the importance of the presence of these funding tools within the financial system in Egypt,” Samy added.
Earlier this year, the government began issuing 18-month bonds alongside its traditional maturities of three, five, seven and 10 years - a step towards building a yield curve in Egyptian debt, which would help to encourage bond trading.
Egypt’s previous sukuk law faced long delays due to concerns from local scholars and politicians that it would allow the seizure of sovereign assets by foreign investors in the event of a default, a debate which the EFSA hopes to avoid.
“We are talking about financial instruments which are common in the Gulf and Asia... we are not talking from a religious or political perspective,” Samy said. (Writing by Bernardo Vizcaino; Editing by Mark Trevelyan)