France-based banking group Societe Generale would be launching a USD 300 million Islamic bond program in Malaysia. One of the sources told Reuters that SocGen would issue the first tranche by the end of the year. This would make SocGen the second European bank to issue these Islamic financial certificates also known as the sukuk. HSBC Holdings issued five-year Islamic bond certificates in 2011 worth USD 500 million in the Middle East. SocGen, however, would be the first bank to tap the Asian market.

Sukuk issuance has become one way for western banks to raise capital. Compared to conventional markets, the cost of credit for issuers of Islamic bonds is lower. Sukuk issuers do not levy interest on their bonds as this not allowed under Shariah law. Instead, they give annual profits to the buyers of the bonds who automatically become co-owners of the debt upon purchase of the sukuk.

Malaysia currently holds the top spot for Islamic bond issuances worldwide, comprising 74% of the market.