Taiwan’s Financial Supervisory Commission (FSC) has given domestic banks and insurance companies the green light to invest in Islamic bonds or sukuk, five months after opening up the market to foreign issuers of the debt.

Taiwanese lenders will be allowed to allocate up to 10% of their net asset values to sukuk, the FSC said in a statement.

The regulator did not set a cap for insurance companies, saying only that Islamic bonds are categorised as foreign fixed income in their portfolios. Insurers are allowed to invest a maximum 65.25% of their investable assets in foreign bonds, Asia Asset reports.

The FSC in June allowed foreign institutions to offer sukuk denominated in foreign currency in Taiwan. None have been issued yet. The market for sukuk, or Islamic bonds, has grown strong over the past decade as more investors have sought Sharia-compliant assets.

Turkey and Indonesia were among the main sovereign issuers of US dollar-denominated sukuk, and the Islamic Development Bank Trust and First Abu Dhabi Bank were two of the biggest corporate issuers, tapping debt markets for $1.5bn and $850m, respectively.

However, sukuk issuance with a maturity longer than 18 months reached $30.6bnin the first nine months, slightly lower than the $31bn (Dh113.8bn) issued in the same period last year, according to Fitch. The figures tracked issuance from the Arabian Gulf, Malaysia, Indonesia, Turkey and Pakistan.

Source International Investment

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