$2billion Islamic bond programme set up in Cayman

(Reuters): Goldman Sachs has registered a $2 billion Islamic bond programme, providing further evidence of conventional borrowers looking to sharia-complaint funding sources as market volatility makes raising debt finance more difficult. The investment bank has set up the Cayman Islands-registered Global Sukuk Company Limited special purpose vehicle to issue murabaha-structured sukuk, according to a base prospectus filed with the Irish Stock Exchange. Murabaha is a cost-plus-profit arrangement which complies with Islamic law.

"In the current environment it is unsurprising to see borrowers turning to markets in which they believe liquidity is still available," Chavan Bhogaita, head of markets strategy unit at National Bank of Abu Dhabi, said. "(Goldman Sachs' decision to tap sukuk) is simply a reflection of the very challenging environment in which we currently find ourselves, and the relative strength of the sukuk market at present given that we are seeing solid demand for assets in this space."

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