Fitch Warns on Rule That Could Turn Sukuk Similar to Equity (1)

A proposed change to the regime governing global sukuk risks transforming the asset class into an equity-like instrument that can’t be assessed by credit-rating companies, according to Bashar Al Natoor,head of Islamic finance at Fitch Ratings.

The so-called AAOIFI Standard 62, aimed at strengthening compliance with Shariah, or Islamic religious laws, would require sukuk issuers to transfer ownership of the underlying assets to the investors. But sukuk-issuing nations can potentially adopt less disruptive ways to implement the rule that would leave the securities ratable, Al Natoor said in an interview.

The Bahrain-based Accounting and Auditing Organization for ...