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South Africa to launch its first Islamic bond

South Africa will launch its first sukuk Islamic bond this year, as it seeks to diversify its debt obligations, Finance Minister Pravin Gordhan said Wednesday.

“Our first sukuk (Islamic) bond will be launched this year,” he told lawmakers while unveiling his annual budget.

Complying with Islamic Sharia law, in which interest is not charged, such a bond has been on the cards as South Africa tries to tap a broad range of lenders to limit risk.

“Options for introducing a sukuk retail savings bond are also being explored,” he added.

Islam-friendly debt is a rapidly growing market, worth around $144 billion in 2012, according to the Global Islamic Finance Report.

Used from Malaysia to the Gulf to Gambia, it is seen as a safer, more stable option by some investors.

South Africa’s debt is set to hit 44.3 percent share of GDP by 2016.