'It is under consideration but no decision has been take yet,' Claude Zimmer, member of the council of the central bank of Luxembourg, told Reuters on the sidelines of a conference in Manama.
He said one of the difficulties was to find eligible assets to underpin the sukuk. Unlike conventional bonds, sukuk do not pay interest; instead investors receive streams of income from the assets used to underpin these vehicles.
Luxembourg is running a budget deficit this year and is likely to continue to run a deficit into next year, prompting the need to borrow.
Zimmer declined to comment further on the timing of any sukuk issuances, saying the country was considering an Islamic bond, in part to boost the industry.
Luxembourg has already been marketing itself as a haven for sukuk and Islamic investment funds. Currently Islamic investors enjoy no double stamp duty, no wealth tax and no liability to Luxembourg tax on profits and income.
But Western interest in issuing a sukuk has floundered in the wake of the global financial crisis. European nations, such as the U.K. and France, have touted the possibility of issuing a sukuk but, so far, none have materialized.
(Reporting by Frederik Richter; Writing by Shaheen Pasha; Editing by Neil Stempleman) Keywords: LUXEMBOURG SUKUK (shaheen.pasha@thomsonreuters.com; +971 4 391 8301; Reuters Messaging:shaheen.pasha.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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