Egypt preparing to issue Islamic bond: Source

Reuters, Wednesday 18 Jan 2012

Government is studying a new legal structure to allow the issuing of a sovereign 'sukuk', says insider

Islamic Sukuk

Egypt, which has been forced to rely on local banks for funds in the wake of last year's popular revolt, is laying the groundwork for a debut sovereign Islamic bond, or sukuk, said a person familiar with the matter on Wednesday.

"Egypt is preparing one," he said. "But the government is studying a new legal structure that will allow them to issue a sovereign sukuk. They're working on both at the same time."

It is too early to determine the size of the issue but the North African country is considering a murabaha structure, he said.

Murabaha is a cost-plus-profit arrangement which complies with Islamic law.

Egypt this week began negotiating $3.2 billion in support from the International Monetary Fund and talks could take 2-3 months, an IMF official said.

Analysts say Egypt is in desperate need of international support to avert a financial crisis, but any agreement is unlikely to prevent a drop in its currency or see any quick revival of the investment needed to fuel growth.

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