Interstan Securities Arranges the First Issue of Islamic Securities in Kyrgyzstan

Interstan Securities is proud to announce that it has arranged the first issue of Islamic securities in the history of Kyrgyzstan.

Islamic securities, also known as Sukuk, are securities that are compliant with Sharia law. They are somewhat similar to bonds in traditional finance but conform to Islamic principles, particularly those related to interest and uncertainty. These principles involve shared risk and reward, and the prohibition of earning interest. Instead of earning interest, Sukuk holders earn a share of the profits generated by the underlying asset. As such, Sukuk securities are asset-backed, meaning they represent ownership in a tangible asset, service, project, business, or joint venture.

The main countries where Islamic securities are issued include Gulf countries such as Saudi Arabia, United Arab Emirates, and Qatar, as well as Malaysia, Indonesia, and Pakistan. In 2022 the Government of Kyrgyzstan set an ambitious goal for the country to become an international hub for Islamic finance. Interstan Securities is proud of being at the forefront of this development.

Very few countries where Islamic finance is dominant offer to be international platforms for issuing Islamic securities, focusing rather on domestic issues. The Kyrgyz Republic is set to change the landscape of Islamic securities issuance by offering a flexible and inexpensive issuing and listing venue for several types of Sukuk. This is based on the peculiarities of local legislation according to which only the securities-issuing SPV (Islamic Special Finance Company) needs to be incorporated in Kyrgyzstan, whereas the originator (the ultimate recipient of funds raised through the Sukuk issue) may be based in any country.

The first issue of Islamic securities arranged by Interstan was Sukuk al Mudaraba – Islamic certificates securitizing a business financing & profit-sharing arrangement with a global trading company from Hong Kong, Intercascade Group. The issue size is 750,000,000 Soms, and it is to be privately placed in its entirety to qualified and institutional investors.

The legal advisor and documentation developer for the issue is John Tiner & Partners, a Swiss-based global securities issuance service firm. The Swiss firm has been actively advising governments and investment market institutions in the Kyrgyz Republic for over a decade and is responsible for drafting key pieces of securities-related legislation in this country. The securities are expected to be listed on The Stock Exchange of Kyrgyzstan – BTS.