Default woes may spell Shariah Finance turning point (The Propaganda Machine Rolls On)
Here we have a marketing piece by Reuters (whose parent company is thoroughly involved in Shariah Finance) masquerading as a news story.
In what other industry or financial sector could a rash of defaults–combined with high fees and conflicts of interest–prompt a wave of faux optimism as expressed in this Reuters fluff piece?
Recent sukuk defaults and Investment Dar’s legal battles are set to reshape Islamic finance as investors demand more transparency on asset structures and proof of borrowers’ creditworthiness.
Several high-profile Islamic bond defaults and the near failure of Dubai property firm Nakheel’s [NAKHD.UL] sukuk have soured investor sentiment toward the sector, casting doubt on claims that the sharia’s safeguards offer added protection.
But as Islamic firms struggle to restructure their debts and holders of defaulted sukuk wait to be repaid, industry experts say these issues will alter an industry which has thrived on cheap oil money and fragmented regulatory standards.