The Palestine Monetary Authority hopes to issue to banks its first Islamic bond worth $50 million by the end of June, its governor Jihad Al Wazir said.
The authority originally aimed to issue the bonds (sukuk) in the first quarter, but obtaining the approval of the issue being in line with Sharia delayed the plan. “We are issuing a $50 million sukuk so it is relatively small, but it is testing the market and it will be a useful instrument. Expected maturity is probably five years,” Al Wazir said.
“If we can speed it up … At the end of this quarter will be a good timeframe,” he said after a meeting of Arab central bankers in the UAE.
The Palestinians do not have their own currency and the Israeli shekel is used for most day-to-day cash transactions. The monetary authority governs part of the West Bank and Gaza Strip.
“Investment vehicles are limited, so it will act also as an instrument that could be used between the banks to increase the flexibility in the interbank market,” Al Wazir said. The sukuk issue will be denominated in US dollars and based on the ijara concept, he said.