KUALA LUMPUR: The Employees Provident Fund’s (EPF) explicit allocation of US$25bil to a new fund dedicated to syariah-compliant investment is set to boost the sukuk market, said Moody’s Investors Service.
Its Global Head of Islamic Finance, Khalid Howladar, said the allocation, which represented 15% of the EPF’s investment, would create the largest standalone Islamic pension fund globally, which was rare in the industry.
“EPF has already invested a lot of its assets in syariah-compliance investment but the recent explicit support is visible.
“When you have a sovereign government pension fund allocating US$25bil, that is a large number and at current sukuk issuances globally, EPF can swallow all of them in one year,” he said at a media roundtable briefing on “Gulf Cooperation Council and Islamic Finance: Volatile Oil Pressures and Islamic Credit Trends” here yesterday.
The international ratings agency said EPF’s new pension scheme would likely boost the demand for sukuk and syariah-compliant securities.
“When external investors see the government pension fund participating, it will encourage them to issue sukuk, knowing that somebody has explicit allocation.
“All of this will help boost demand which is always positive for the sukuk sector,” he said.
Moody’s also noted that Malaysia’s second largest pension fund, Kumpulan Wang Persaraan, with a total size of US$30bil, had also announced its plan to become a full-fledged Islamic pension fund.
The ratings agency predicted that crude oil prices to stay range bound with medium-term range until 2018 at between US$40 and US$60 per barrel. – Bernama