The market for Islamic bonds was seriously rocked from 2007-2009 when the global economic crisis forced numerous defaults.

Lately the sukuk market has been thriving, with new issuances setting records. Clearly, sukuk have become the instrument of choice for spreading Shariah in the financial world.

But in the past week there have been two high profile restructurings of sukuk arrangements that call into question whether or not trouble may be brewing in the marketplace. It is too early to tell if this is a beginning of a pattern, but given the jaded history of the sukuk market, it certainly warrants careful scrutiny…

In Bahrain, Gulf Finance House BSC, a Shariah-compliant investment bank, announced this week that it has successfully obtained the approval of its Sukuk holders to restructure its outstanding debt amounting to US$ 110 million.

And in Dubai, DIFC Investments, the investment arm of the company running Dubai’s financial free zone, is close to securing a $1 billion loan from four banks to help refinance an upcoming Islamic bond maturity–an event that DIFC evidently desperately needed to avoid because its ability to meet its obligations under the sukuk contract was in serious doubt.



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