The Islamic Finance Association of Iran (IAIF) held the sixth pre-session of its 10th annual conference on Saturday (Jan. 20) online. The event was titled “Callable Sukuk Issuance in Islamic Capital Markets: Innovation in Sukuk Issuance” and took place at 2 p.m. Iran time. The Indonesian Association of Islamic Economists (IAEI) also became a strategic partner in organizing the program.
In this conference, a number of Islamic finance experts from various countries discussed the innovation of Callable Sukuk issuance as a financial instrument that provides flexibility for issuers in managing profit risk. Speakers included Majid Pouyanmehr (Head of Islamic Finance Office at Securities and Exchange Organization of Iran), Tariq Naseem (Head of Islamic Finance at Securities and Exchange Commission of Pakistan), Mohammad Hussain Sadraei (CEO of Central Asset Management Company, Iran), and Mhd. Iqbal Balative (Head of Transaction Planning and Sukuk Instrument Development, Ministry of Finance Indonesia).
Majid Pouyanmehr explained that the issuance of Callable Sukuk allows the issuer to redeem the sukuk before maturity, so it can adjust its financial strategy to changing market conditions. “The callable feature allows the issuer to buy back the old sukuk with a fixed profit rate and issue a new sukuk with a more competitive profit rate,” he said.
The main advantages of callable sukuk include increased incentives for issuers, flexibility amid economic uncertainty, and better transparency in the capital market. However, challenges include higher financing costs and more complex negotiations with investors.
From a Pakistani perspective, Tariq Naseem highlighted the significant growth of the sukuk market in his country. By the end of 2024, Pakistan's sovereign sukuk market value will reach PKR 7.6 trillion, while the corporate sukuk market will reach PKR 870 billion. He also revealed innovations such as short-term Modaraba-based sukuk and plans to develop retail digital sukuk.
On the other hand, Mhd. Iqbal Balative highlighted the rapid development of Islamic finance in Indonesia, particularly through the issuance of Sovereign Sukuk. Until 2024, the total sovereign sukuk issued has reached IDR 1,531 trillion, making Indonesia a global leader in sovereign sukuk issuance. “Innovations such as the Primary Dealership system and e-SBN platform have improved the efficiency of sukuk management and attracted more Islamic investors,” said Mhd. Iqbal.
With the increasing interest in sharia-based investments, the conference is expected to serve as a platform for stakeholders to continue developing innovations in the sukuk sector. Callable Sukuk is considered as an instrument that can strengthen the role of Islamic finance in supporting global economic growth, especially amid dynamic economic challenges.
Translated with DeepL.com (free version)
