SUKUK IN MALAYSIAN CAPITAL MARKET

Transcription

1 3107 SUKUK IN MALAYSIAN CAPITAL MARKET Noriza Binti Mohd Saad Department of Finance & Economics Universiti Tenaga Nasional (UNITEN) Muadzam Shah, Pahang, Malaysia. Nor Edi Azhar Binti Mohamad Department of Finance & Economics Universiti Tenaga Nasional (UNITEN) Muadzam Shah, Pahang, Malaysia. ABSTRACT Nowadays, an investment in Islamic capital market in Malaysia was highly demanding not only by listed firms but also unlisted firms. Throughout this issue, this study is motivated to trigger off the performance of sukuk issued by listed company (49 companies for period of ) based on their sectors or industries towards sukuk features. On the other hand, multivariate regression model has been applied to investigate the relationship between sukuk yield and its features. Secondary data are gathered from Bank Negara Info Bond Hub website and Rating Agency Malaysia (RAM) for such a sukuk features. The results revealed that there is a statistically significant relationship among variables and most of the listed issuer was issued sukuk Al-Bai-Bitaman Ajil (BBA) (68%) as compared to others sukuk structure whereby majority the issuer listed firms comes from infrastructure and utilities sector (53%). The listed firms should issue sukuk since it was proven can generate high yield besides highly demanding in global capital market not only by muslim community but also non muslims. Field of Research: Islamic Capital Market, Sukuk, Yield, Sukuk Features

2 Introduction During the periods, in economic crisis, the Sukuk issuance had risen from RM2.3 to RM5.2 billion. This figure was continuously increasing between the years of from RM7.6 to RM13.2 billion and this constituted 43% of total private debt securities issuance based on Bank Negara Malaysia (Monthly Statistical Bulletin report, 2002). The rating Agency Malaysia in July 2003, highlighted that the total value of Islamic bonds issues approximately had increased to RM70 billion. Securities commission who is given statutory mandate to develop the Malaysian capital market reported that between the periods, RM336 billion worth of corporate debt securities and Islamic bonds were raised by the private sector to fund economic activities, including long-term infrastructure projects. The significant increase in this issuance statistics shows that the evolution of sukuk and the development of their transaction is very important to the Malaysian capital market in mobilizing capital adequacy. Development of sukuk market starts with the Malaysian government as the first issuer of Islamic bonds with the issuance of the Government Investment Issue or GII (formerly known as the Government Investment Certificate or GIC) in 1983 to facilitate the management of assets in the Islamic banking system. Followed by the Malaysia s first Islamic private bond issue by Shell MDS Sdn Bhd s RM125.0 million of al-bai Bithaman Ajil facilities in 1990 [Jalil, 2005]. A significant milestone for the development of sukuk in Malaysia taken it place with the issuance of global sukuk Ijarah by Kumpulan Guthrie Berhad amounting to US$150 million in January In June 2002, Malaysia successfully launched the world s first sovereign Sukuk (Malaysian Government Sukuk lease-participation trust certificate) wholly owned by the government issued the USD600 million 5-years Islamic bonds (Sukuk) based on the Ijarah concept. It s Shari ah-compliant in all major Muslim countries and received Shari ah endorsement by the international Shari ah supervisory committees such as from HSBC and the International Islamic Financial Market (IIFM).[SC,2002]. Based on the Rating Agency Malaysia Berhad (RAM) report in 2004, the Malaysian corporate sukuk market continued to expand and mature in 2004, affirming the role that Islamic finance plays in mobilizing the capital needed by corporate. The entry of 51 corporates sukuk issues, with an aggregate value of RM15.03 billion. These represented 55% of total ringgit denominated corporate bonds issued which grossed RM27.37 billion. To the credit of the industry, these well-received sukuk issuances underscore the growing appetite for Shari ah-compliant instruments and strong investor confidence in the prospects of such instrument. Meaning that, from this report the size of sukuk issuance was tremendously increasing among public and private sector in generating profit. Furthermore, Aziz (2007) a governor of Bank Negara Malaysia said that the growing role of Islamic finance in mobilising and channeling funds to productive investment activities across borders contributes to more efficient allocation of funds across borders and facilitates international trade and investment. The more recent developments in Islamic finance are the rowing significance of the sukuk market to become an increasingly important component of the development of the global sukuk market. There has been growing interest in the issuance of sukuk by corporations, sovereigns and multinational corporations; the demand for sukuk significantly exceeds the supply.

3 3109 Sources: Overview of Islamic Finance by Grail Research (June 2007) Today, the global sukuk market, denominated in international currencies, is estimated to exceed USD50 billion. Although the size of the market is modest by global standards, the sukuk market is experiencing remarkable growth, increasing at an average rate of growth of forty per cent per annum. Research done by Grail in June 2007 stated that Malaysia was domination in the global sukuk market in dollar by 76.2%. Consider to these issues, the study was highlighted twofold objective; (i) to investigate the most important sectors and sukuk types issued by listed firms in main Malaysian capital market; and (ii) to investigate an association between sukuk features with companies sukuk yield. The remainder of the paper is structured as follows. Section 2 includes review of literature on sukuk issuance. Then, section 3 introduces the operational definition for sukuk types used and describes the data and variables for the study. The proposed methodology is applied where the statistic is derived in this section to test the model hypothesis testing. Further, the results are discussed to show how the model can be put to use by listed firms in section 4. Finally, section 5 summarizes some conclusions and recommendations. 2. Literature Review Capital market is a market for securities for either bond or equity traded public and/or private companies and also government, and can raise long-term funds. Islamic Capital Market also refers to the same market but all activities are carried out and shall not be conflicted with the principles of Islam where the market is free from prohibited activities. Besides other elements such as riba (usury) either riba al Buyu (exchange transaction) or riba al Duyun (loan or debt transaction), maisir (gambling) and gharar (ambiguity, uncertainty, hazard, ignorance) including gharar fahish, that is excessive or major and gharar yasir, which refers to tolerable or minor. The growing awareness of demand for investing in accordance to Islamic principles on a global scale has created a flourishing Islamic capital market, more so today due to increasing wealth in the hands of Muslims worldwide who are actively involved in business and industry activities. World Population Statistics website revealed there is approximately 1.6 billion Muslims worldwide which is representing 24% of total world s population. According to Kuala

4 3110 Lumpur Islamic Forum, 13% of total Muslim comes from Malaysia (16 millions) and Indonesia (195 millions). Even though, Indonesia has many Muslims population as compared to Malaysia, Malaysia remains the leader for global sukuk market in June 2007 by 76.2%. Previously, RAM was reported in 2004, the Malaysian corporate sukuk market continued to expand and mature in 2004, affirming the role that Islamic finance plays in mobilizing the capital needed by corporate. Thomas (2007) also stress on the important of the sukuk market. He argue that the application of the forward lease is an innovation developed elsewhere, but made possible in the sukuk space thanks to Malaysia s progressive steps to define the broad sukuk space, and grow it with new concepts. Alshowaikh (2008) also mentioned that Malaysia has been developing a more extensive capital market after the Asian financial crisis to ensure a more resilient financial system. He also said that Malaysia is a matured market as indicated not only by the market share but also by the number of issuances. Tariq (2004) mentioned in his study the success and popularity of the Sukuk framework as an alternative asset management platform will invariably require inbuilt mechanisms which can be instrumental in mitigating risks that exist in the structures due to the benchmarking of Sukuk with market references such as London Inter-bank Offer Rate (LIBOR). Rodney (2008) provides an analysis of different sukuk structures from a financial perspective. This examination includes murabahah and ijara-based sukuk, the former offering a fixed return, and the latter, the most popular form of sukuk, a variable return. The potential for other more novel sukuk structures based on musharakah partnership contracts is also examined, and sukuk pricing issues are explored using alternative benchmarks to LIBOR. The paper finds that special purpose vehicles are a prerequisite for the successful issuance and management of sukuk. Rosly &. Sanusi, (2008) argue that financial contracts involving use of bay al-inah and bay al-dayn have been extensively used in design of Malaysian Islamic bonds. This paper argues that both these mechanisms have been found unacceptable by the majority of Islamic scholars and proposes the use of financing based on Muqarada and Musharakah principles as genuine alternatives to Interest-bearing financial instruments. The Malaysian ringgit remains the most common currency for sukuk issuance, followed by the dollar. Jobst, (2008) said that the recent years have witnessed a surge in the issuance of Islamic capital market securities (sukuk) by corporates and public sector entities amid growing demand for alternative investments. As the sukuk market continues to develop, new challenges and opportunities for sovereign debt managers and capital market development arise. Ismail (2002) said that the growth of Islamic Private Bond ( IPDS ) in Malaysia has been very encouraging since the first issue in In 2001, the issuance of IPDS constituted 43% of total PDS issued compared to 34% in With its continued strong presence, we can expect IPDS to take up a larger share than conventional PDS in The Islamic bonds issued in 2001 were mainly to finance large privatized projects such as water and power projects which require higher capital outlays. The Al-Bai Bithaman Ajil ( ABBA ) structure has been the preferred choice to finance such projects with long gestation periods. Besides ABBA, another popular IPDS tool is the Murabahah concept which caters for short- to medium-term requirements. In Malaysia, all debt securities and sukuk issues are required to be accompanied by a credit rating at all times. A credit rating is a mechanism through which an independent third party, for example credit rating agencies (CRAs) makes an assessment on the likelihood of a corporate issuer to default on its debt repayments. There are two credit rating agencies (CRAs) in Malaysia that provide independent opinions on the credit risks and potential default risks of specific issuers. The first rating agency, Rating Agency

5 3111 Malaysia Berhad (now known as RAM Rating Services Berhad), was established in November 1990; the second, Malaysian Rating Corporation Berhad (or MARC), was incorporated in October Malaysia is one of the first countries in the world to require the recognition of CRAs for the purpose of sukuk rating issue. This is in recognition of their vital role in evaluating the probability of default of a bond or debt securities or sukuk issue, and the importance investors place on ratings for their investment decisions. Despite the fact that all rating reports carry a disclaimer expressly stating that a rating is not a recommendation to purchase, sell or hold a security s market price or its suitability for a particular investment, it does not involve any audit by the rating agency. In contrast to most other Asian bond markets, the corporate debt securities and sukuk in Malaysia is as large as the Government securities market. The corporate debt securities and sukuk market have continued its growth in large part due to, among others, the expeditious approval from the Securities Commission Malaysia, i.e. issues that meet certain criteria will be deemed approved upon the receipt of documentation by the Securities Commission. The Securities Commission and Bank Negara Malaysia have also worked closely to facilitate the growth of the corporate debt securities and sukuk market through the issuance of joint guidelines, such as the Joint Information Note on the Issuance of Foreign Currency-denominated Bonds and sukuk in Malaysia. Following these, multilateral financial institutions, multilateral development banks and foreign corporations have all tapped the Malaysian debt securities and sukuk market for their financing needs and profiling purposes. These issuers include globally recognized names such as the World Bank, the Asian Development Bank, KfW Bank engruppe of Germany and Industrial Bank of Korea. 3. Data and Methodology 3.1 Operational Definition of Sukuk Types and Its Features A Malaysian capital market was developed based on two types of famous market that are stock markets and bond markets. Nowadays, Malaysia becomes to be premier country by issuing Islamic securities either Shari ah compliant securities for listed firms in main market or Islamic bonds or Sukuk. Sukuk that have become global accepted Islamic alternative to conventional bonds and thus are major focus here. Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) released an exposure draft of its Shari ah standards concerning Sukuk in November The exposure draft of AAOIFI Shari ah Standard No. 18, p.4 stated that Investment Sukuk are certificates of equal value representing, after closing subscription, receipt of the value of the certificates and putting it to use as planned, common title to shares and rights in tangible assets, usufructs, and services, or equity of a given project or equity of a special investment activity. Other draft by Islamic Financial Services Board (IFSB) stated that sukuk (a plural of sakk) frequently referred to as Islamic bond are certificates with each sakk representing a proportional undivided ownership rights in tangible asset, or a pool of assets or in the assets of specific project or investment activities. In this study, there are only 6 types of sukuk issued (eg; BBA, Al-Murabaha, Al- Ijarah, Al-Istina, Al- Musharakah and Al- Mudharabah) by listed firms in Malaysia but there are 14 types of sukuk listed by AAOIFI such Al- Ijarah, Ijarah Mowsufa Bithima, Manfaa Ijarah, Manfaa Ijarah Mowsufa Bithima, Milkiyat al-khadamat, Al-Salam, Al-Istisna a, Al-Murabaha, Al-Musharakah, Al- Mudharabah, Al-Wakala, Al-Muzra a, Al-Musaqa and Al-Muqarasa. Manaf (2007) discussed in his study, there are seven types of

6 3112 Islamic bond based on model of financing and trades which structure the bond. These are mudaraba/ muqarabah sukuk, musharakah sukuk, Ijarah sukuk, Murabaha sukuk, Salam sukuk, Istisna sukuk and Hybrid sukuk. However, each of sukuk types that have been used in this study was defined based on Guidelines on the Offering of Islamic Securities 2004 as follows: Sukuk Al-Bai-Bitamal Ajil (BBA) Refers to a sale and purchase contract transaction for financing asset on a deferred and an installment basis with a pre-agreed payment period. The sale price will include a profit margin. Sukuk Al- Murabaha Refers to a sale and purchase contract transaction for financing assetwhereby the cost and profit margin (mark-up) are made known and agreed by all parties involved. The settlement for the purchase can be either on a deferred lump sum or on an installment basis, which will be specified in the agreement. Sukuk Al- Ijarah Refers to a manfaah (usufrust) type of contract whereby a lessor (owner) leases out an asset or equipment to its client at an agreed rental fee and pre-determined lease period upon the aqad (contract). The ownershipof the leased equipment remains in the hands of the lessor. Sukuk Al- Istina Refers to a purchase contract of an asset whereby a buyer will place an order to purchase the asset which will be delivered in the future. In other words, the buyer will require a seller or a contractor to deliver or construct the asset that will be completed in the future according to the specifications given in the sale and purchase contract. Both parties of the contract will decide on the sale and purchase prices as they wish and the settlement cab be delayed or arranged based on the schedule of the work completed. Sukuk Al- Musharakah Refers to a partnership arrangement between two parties or more to finance a business venture whereby all parties contribute capital either in the form of cash or in kind for the purpose of financing the business venture. Any profit derived from the venture will be distributed based on a pre-agreed profit sharing ration, but a loss will be shared on the basis of equity participation. Sukuk Al- Mudharabah Refers to a contract made between two parties to finance a business venture. The parties are a rabb almal or an investor who solely provides the capital and a mudharib or an entrepreneur who solely manages the project. If the venture is profitable, the profit will be distributed based on a pre-agreed ratio. In the event of a business loss, the loss shall be borne solely by the provider of the capital. 3.2 Sampling and Data Collection The sample of 49 listed companies in main market Bursa Malaysia had been selected which is representing a full sample for five conservative year s period from 2005 to This study was focus

7 3113 only on sukuk (Islamic bond) and not on conventional bond. For the purpose of collecting information on the sukuk features, this study obtained data from the RAM and BNM Bond Info Hub where there are sufficient for gathering data on sukuk types, size of issuance, tenure, rating, payment styles and yield. The data was segregated based on range in order to analyze their performance based on industries (six sectors were selected). Data on sukuk rating was developed where by 1 for AAA to A (high class bond); 2 for BBB to B; 3 for C group (C, C1and others) and 4 for D and below (which is classify as a speculative bond or junk bond). There are only two types of payment styles obtained from the data retrieved that are semi-annually and annually. 1 was set up as payment by semi-annually and 2 as an annually. In this study, yield is refers to the rate of return anticipated on a sukuk if it is held until the maturity date which is considered a long-term sukuk yield (since the data obtained for tenure at minimum period is 2 years and mean is more than 12 years) expressed as an annual rate. The calculation of yield takes into account the current market sukuk price, par value, coupon rate and time to maturity. The equation for yield is stated below: Yield = c (1 + r)^-1 + c(1 + r)^ c(1 + r)^-y + P(1 + r)^-y where; c is the annual coupon payment (in Malaysian Ringgit), Y is the number of years to maturity, r is the discount rate, and P is the par value of the sukuk. Then, the relationship between the sukuk features and firms yield used the following multiple regression equations: Yield i ) 1 ( Ty 1 ) 2 ( R 2 ) 4 ( I 4 ) 5 ( Tn 5 ) 6 ( P6 i Where; = the constant term, = the coefficient estimates of the explanatory variables, Ty i = the sukuk types of the companies, R i = the sukuk rating by thecompanies, I i = the issuance of thecompanies, Tn i = the tenure of the sukuk issued by companies, P i = the payment styles of the companies bond, and i = the standard error of the ith bond. Here with, this study was developing the null and alternate hypothesis to outfit for the pooling regression model as below: Ho: There is a significance relationship between sukuk yield and its features. Ha: There is no significance relationship between sukuk yield and its features.

8 Result and Discussions 4.1 Sukuk Issuer by Sector in Malaysian Main Market for Figure 1 show the statistics of sukuk issuer whereby the largest market sector is infrastructure and utilities (53%). This result was supported by RAM report in Malaysian Business on 17 July, 2011 stated that the Malaysian infrastructure sector accounted for the most of the sukuk issued as of end year 2007, or 25% of all Islamic capital securities issued and rated, given the massive funding requirements needed. Followed by plantation and agriculture (11%), property and real estate (9%), financial services (7.8%), industrial product (7%), construction and engineering (6.2%) and other sectors indicated 2% and below. However, the same report by RAM revealed that the second and third largest is property and real estate and industrial product by 18% and 7% respectively due to the global recession on 2007 that affected this sector. The contradiction result probably due to sample period until 2010 whereby the RAM report covers only during global recession period of Sector of Sukuk Issuer 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 0.4% 7.8% 0.2% 11% 0.4% 7% 6.2% 9% 2% 1.6% 53% 1.6% Figure 1: Sukuk Issuer Sectors by Listed Firms

9 Sukuk Types Issued by Listed Firms in Malaysia From Al- Istina and Istina 6% Musharakah 7% Mudharabah 5% Ijara 14% Type of Sukuk Murabaha 0% Al Baithaman Ajil 68% Figure 2: Types of Sukuk Issued by Listed Firms in Main Market Figure 2 shows that six types of sukuk issued by listed firms in main market Malaysia. Sukuk BBA shows the most preferable issuance (68%) followed by Ijarah (14%), Musharakah (7%), Istina (6%), Mudharabah (5%) and no firms issued Murabahah (0%) for the study period. Ismail (2002) in his study mentioned that Al-Bai Bithaman Ajil ( ABBA ) structure has been the preferred choice to finance such projects with long gestation periods. Besides ABBA, another popular IPDS tool is the Murabahah concept which caters for short- to medium-term requirements. By comparing the result of the study, even though that is different in time frame but BBA was dominated the Malaysian capital market for long time ago. 4.3 Results of Descriptive Statistics for Sukuk Yield and Its Features Table 1: Minimum, Maximum and Mean Results of Sukuk N Minimum Maximum Mean Types of sukuk Issuance Tenure Rating Payment Yield Valid N (listwise) 3171 Table 1 revealed result of descriptive statistics for minimum, maximum and mean of sukuk yield and its features. Amidst the period of studied ( ), the minimum value of yield is 3.5% and the maximum value show encouraging percentage at 168.5%. Good percentage shown for the yield mean

10 3116 that is 9.512%. Meaning that, by issuing sukuk it s been uphold yield to the listed firms for long term investment without distressing losses. Regards to sukuk features, mean result for types of sukuk issues by listed firms is 1.24, meaning that most of the issuer preferred BBA (rank 1) to issue compared with other types of sukuk proven by Ismail (2002). In terms of issuance, the minimum value issued by firms is RM5 millions, maximum is RM5,000 millions (by Public Bank Berhad on 5-Jun-2009) and mean is RM268 millions. Statistics shown the tenure (maturity period) indicate 100 years is the longest (by PLUS Berhad) and 2 years for the minimum with the mean of years maturity period. Sukuk rating shows that majority of the issuance is rated at AAA (rank 1= AAA to A) to B (rank 2= BBB to B) with mean value of High rating classification is association with high yield and verse versa. However, there are still have listed firms issued junk bond which is associated with high risk probably due to quite uncomplicated issuing requirement or require huge capital immediately. In terms of sukuk payment, most of the listed firms (mean = 1.03) were used semi-annually instead of annually appropriate to enhanced offer of coupon rate in their transactions. 4.4 Multivariate Regression Results Thorough multiple regressions results from table 2 reveals that 4 out of 5 sukuk features had shown a significant value to the regression model. In these regressions, sukuk types, tenure and rating have positive association to sukuk yield at 1 percent significant level with t-value of 7.164, and respectively. Meaning that, listed firms were chosen right options among sukuk types whereby BBA at the highest rank generate a high yield to them as compared to Murabahah (lowest rank). Sukuk tenure also has positive relation with yield and this result was support the theory for finance in investment is high risk high return, long-term investment engender higher return. Evidently, statistical reports lead to longer period associate to higher yield and verse versa. Rating result shown the high rating issued by listed firms will generate a high yield for their capital market investment. In contrast, junk sukuk (rank 5 in this study) will generate a low yield to the issuer. Size of issuances indicated negatively insignificant value whereby this sukuk feature does not influenced the yield either the firm s issues small or huge amount in sukuk size.

11 3117 Table 2: Results of Multivariate Regression Model (Yield) Standardized Unstandardized Coefficients Coefficients B Std. Error Beta t 1 (Constant) Types of *** sukuk Issuance Tenure *** Rating *** Payment *** R = 0.404; R Square = 0.163; F value= *** Notes: p-value (sig.) is denotes by symbol (***) where indicate significance at 1percent level. R-squared and adjusted R-squared result is and respectively and therefore explaining a somewhat not strong relationship because only 16.3% to 40.4% percent of the variation in yield is explained by the variation in the sukuk features. Regardless of the relationship doesn t prove to be the strong relationship because the value of R is below 60 percent which consistent with suggestion made by Gompers et al. (2003). F-statistics ( ) had shown significant value at 1 percent confident level meaning that the relationship was exists for the model equation. To conclude the finding, Ho was accepted proven by sukuk features have a significant relationship with yield and Ha was rejected. 4.5 Pearson Correlation Results Table 3: Results of Pearson Correlations Types of sukuk Issuance Tenure Rating Payment Yield Types of sukuk Issuance Tenure Rating Payment Yield

12 3118 Table 3 reported the p-value of correlation are relatively low (correlations value less than 0.8) justifiable that no multicollinearity problems exist among variables as mentioned by Gujarati (1995). Types of sukuk have negatively significant correlated with size of issuance (-0.057), tenure (-0.107) and rating ( ) but inversely with payment styles (0.225) at 1 percent significant level and insignificant correlated with yield. Size of issuance was shown that only significant positive correlated at 1 percent with rating (0.067), negative correlated at 1 percent with sukuk types (-0.057) and other variables were shown insignificant correlated. This mixed result is applied to other variables. 5. Conclusion and Recommendations Predominance of the issuances by listed firms in Malaysian capital market is by sukuk BBA. The preferable of this sukuk due to background of the business sectors itself whereby they need such types of sukuk in optimizing their business, for example by infrastructure and utilities sector (53%) as a main player. The regression model results was shown that all sukuk features except for issuance have a strong significant value at 1 percent confident level with yield entail that issuer among listed firm in main market ought to intensely considered sukuk types, tenure, rating and payment styles in their prospect issuances to strike the global sukuk market at competitive rates. Regards to sukuk rating, most of the listed firms issues high class rating that is AAA to B. Parallel in Malaysia capital market, prior to July 2000 all corporate bond issues were subject to a mandatory minimum rating requirement of BBB or above, however this compliance rule was subsequently lifted probably due to still have a firms issues junk bond even it was slightly number. The listed firms should issue sukuk since it was proven can generate high yield besides highly demanding in global capital market not only by muslim community but also non muslims. References AAOIFI (2002), Investment Islamic Bonds (Shar iah Standard No. 18), Manama: Accounting and Auditing Organization for Islamic Financial Institutions. Available at (accessed 20 Mac 2011). Aziz, Z.A. (2007), The challenge for a global Islamic capital market strategic developments in Malaysia. Keynote address Governor of the Central Bank of Malaysia, at the Islamic Bonds Summit London. Aziz, Z.A. (2007), Malaysia s experience in strengthening its market for global Islamic Bonds activities. Keynote address Governor of the Central Bank of Malaysia, at the 2nd Malaysian Islamic Finance Issuers and Investors Forum 2007, Kuala Lumpur, Malaysia. Bank Negara Malaysia (2007), Annual Report. Kuala Lumpur, Malaysia.

13 3119 Gompers, P. A.; Ishii, J. L.; Metrick, A.(2003), Corporate Governance and Equity Prices. Quarterly Journal of Economics, Vol. 118, No. 1, pp Gujarati, D (1995), Basic Economics; McGraw-Hill Singapore. Islamic Finance Information Service (IFIS), (2008); Islamic Bonds Issuance Continues to rise despite Slowdown. Available at 17 Mei 2011). Islamic Financial Services Board (IFSB), December 2007 Exposure draft on Capital Adequacy Requirements on Sukuk Securitilization and Real Estate Investment. Available at Ismail, M.I. (2002). Rating Agency Malaysia Berhad (RAM). Islamic Private Debt Securities: Issues & Challenges. RAM report on March 2002, Malaysia. Jalil, A. (2005), Islamic Bonds Issues: The Malaysian Experience, Proceeding of The 6th Asian Academy of Management Conference,Perak, Malaysia,pp Jobst, A. et, al.(2008). Islamic Bonds Issuance, What Sovereign Debt Managers Need to Know, IMF Policy Discussion Paper. Malaysia International Islamic Financial Centre-MIFC.(2007). Islamic Bonds/Islamic Bonds Market. Available at 17 Mei 2011). Malaysian Rating Corporation Berhad (2006); Rating Approach to Islamic Bonds Musyarakah Transactions. MARC Report on February Pp.1-6. Available at 17 Mei 2011). Manaf, I.A. (2007). Islamic bonds (Islamic Bond): Its introduction and application. Available at 7 January 2011) Rodney, W. (2008); Innovation in the Structuring of Islamic Islamic Bonds Securities; International Journal of Systems and Ethics. Vol. 24 (2008) Issue 3 rd July, pp Kuala Lumpur Islamic Finance Forum, Islamic Finance News, Zawya, Central Bank of Iran. Rosli, S.R & Sanusi, M.M (2008); The Application of Bay Al- Inah and Bay Al-Dayn In, Malaysian Islamic Bonds: An Islamic Analysis, International Journal of Islamic Financial Services, Vol. 1 No.2. Securities Commission (2002), Annual Report, Kuala Lumpur. Tariq, A. A. (2004). Managing Financial Risks of Islamic Bonds Structures, M.Sc. International Banking. AA Tariq Copyright, Loughborough University, UK. Thomas, A. (2007). Malaysia s Importance to the Islamic Bonds Market : March 2007 Report. American Journal of Islamic Finance. Available at (accessed 17 Mei 2011).

14 3120 Website: Bank Negara Malaysia Securities Commission Malaysia Bursa Malaysia Bond Info Hub AsianBondsOnline RAM Rating Services Berhad Malaysian Rating Corporation Berhad Bond Pricing Agency Malaysia Sdn Bhd