“Multilateral development banks will benefit from the growth of Islamic finance” (Moody’s)

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Moody’s Investors Service, the credit rating subsidiary of Moody’s Corporation, announced in a recently released report that Sharia-compliant multilateral development banks (MDBs) will benefit from the growth of Islamic finance and the associated increase in application for highly rated sukuk.

This further growth of the World Islamic Bank will strongly influence the demand for multilateral development banks, which will also benefit from the growth of the Islamic Bank in North and Sub-Saharan Africa through syndications and retrocessions, supporting the plans. expansion

The lack of high-quality liquid assets has been a constraint for Sharia-compliant financial institutions, which suffered low or negative carry as a result. This shortfall creates a large number of latent demands for high-quality Sharia-compliant securities, promoting market access for Islamic MDBs.

“The Islamic Corporation’s mandate for Private Sector Development and its increased strategic focus on on-lending to financial institutions positions it well to benefit from the growth of the sector,” said Thaddeus Best, analyst at Moody’s Investors Service.

Sharia-compliant MDBs are also well positioned to benefit from the growing attention to environmental, social and governance (ESG) themes and sustainable investing, as the principles of Islamic finance prohibit investment in certain industries.

In line with its growth expectations for conventional sustainable bond issuance, Moody’s expects a similar expansion in green and sustainable sukuk issuance, given strong investor demand and the IDB’s mandate to support targets. sustainable development

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