SEC APPROVAL FOR LOCAL 'SUKUK' BONDS

The sukuk bonds will expand the list of products that Muslim mutual funds can invest in here in Thailand.

Special-purpose vehicles will be established by the fund-raisers to act as the trustee for the underlying asset. The SEC will waive the approval fee for the SPVs.

Besides the existing offering and information disclosure requirements imposed on conventional bonds, sukuk issues also need financial or legal advisers to confirm that the bonds are certified by sharia, or Islamic law.

Investors will receive trust certificates as sukuk bonds.

The SEC will propose amendments to the Securities Business Act to allow commercial banks and other financial institutions to be the brokers, traders and distributors of sukuk bonds.

Islamic assets across the globe are expected to reach US$3 trillion-$4 trillion (Bt100 trillion-Bt133 trillion) in the next few years.

Sukuk bonds differ from conventional bonds in the form of financial return to holders. Instead of interest, the holders will share investment risks and returns.

Mostly, funds raised from the bonds are invested in rental assets and the rental income will be split among holders. The funds may be managed by a fund company, and returns will be split.