Luxembourg to Meet Investors Before Debut Islamic Bond Sale

Luxembourg will start meeting investors in the next two months to drum up support for a debut sale of Shariah-compliant bonds.

The ministry will visit the U.K., Malaysia, Saudi Arabia, the United Arab Emirates and Qatar to market the securities to institutions, it said in an e-mailed statement dated Aug. 7. Luxembourg, which has an AAA credit rating at Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, will use three government buildings as assets in the transaction, according to the Finance Ministry’s website.

Luxembourg’s sale would be the second Shariah-compliant bond issue from a European sovereign this year after the U.K. raised 200 million pounds ($335 million) in June. Borrowers from Hong Kong to South Africa are considering selling sukuk to help tap the liquid and fast-growing Islamic segment. Investors bid for more than 10 times the amount offered by the U.K.

The sukuk, which pay returns on assets to comply with Islam’s ban on interest, would help Luxembourg diversify its status as a financial center and develop new skills to help it stand out from other European hubs, according to the finance ministry’s website.

Global sukuk sales total almost $27 billion this year, according to data compiled by Bloomberg, compared with about $21 billion for the same period in 2013.