02 June 2008
Government sterling sukuk issuance: a consultation
Following the commitment made at the 2007 Pre-Budget Report to consult on the potential issuance of a wholesale sterling sukuk by the Government, the Government published on 14 November 2007 a consultation document seeking views on the advantages, disadvantages and risks flowing from any sukuk issuance.
The Government's response to the consultation was published today. The Government has considered the responses to the consultation closely. The responses to the consultation have played a valuable role in informing the Government’s thinking on the nature of potential sukuk issuance. In particular, the Government:
- believes that the balance of advantages and risks lies with ‘bill-like’ sukuk rather than ‘bond-like’ sukuk;
- believes that a rolling programme of up to around £2 billion of bill-like sukuk issuance would be achievable over time;
- believes that a ‘bill-like’ sukuk programme would be fully integrated with the conventional Treasury bill programme, which has rolling issuance at 1, 3 and 6 month maturities; and
- would favour a ‘plain vanilla’ Ijara-based structure to facilitate sukuk issuance.
The Government will continue to work to resolve outstanding issues and will announce an update of progress in the 2008 Pre-Budget Report.
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