The Philippines has initiated the promotion of its inaugural US-dollar-denominated Islamic bond, marking a significant step in the country's financial strategy. This pioneering move is part of the nation's broader plan to diversify its funding sources while leveraging the current dip in US dollar borrowing costs.
Philippines' Foray into Islamic Finance
The Southeast Asian country is making its first foray into the global Islamic finance market by issuing a sukuk, a type of bond that complies with Islamic finance principles. Finance Secretary Benjamin Diokno revealed the plans to raise $1 billion through the issuance of sukuk bonds, during an interview in Toronto.
Targeting a New Pool of Investors
This strategic move is aimed at attracting a new demographic of investors who are interested in Sharia-compliant financial products. The introduction of the sukuk is expected to not only broaden the Philippines' investor base but also potentially decrease borrowing costs over time.
The Potential of the Sukuk Market
The issuance of this Islamic note signifies the Philippines' entry into the growing Islamic finance market, a sector seeing increased investor interest. The government's maiden Sukuk bond offer aims for a benchmark-sized US dollar-denominated Sukuk issuance with a tenor of 5.5 years. This initiative is indicative of the country's efforts to provide an alternative to traditional bond instruments and potentially lower the cost of borrowing in the long run.