A ruling in a dispute over sukuk issued by Dana Gas is “credit positive” for Islamic finance, according to a ratings agency.
The English High Court ruled on November 17 that the purchase undertaking attached to the sukuk was valid and enforceable under English law.
“The ruling by the English court is credit positive for the Islamic finance industry because it adds certainty around the legal enforceability of the sukuk,” said ratings agency Moody’s.
Issued in 2007 and restructured in 2013, the disputed sukuk are of the Mudaraba type. As with other forms of sukuk, they were structured to provide returns associated with conventional bonds within an Islamic financial framework.
In June 2017, after apparently discovering the sukuk were not sharia-compliant, Dana Gas proposed to exchange the sukuk for new securities. According to Moody’s, the new securities had inferior terms with a profit rate less than half that previously offered. Sukuk holders took the company to court.
Dana Gas says it will appeal the English High Court ruling.
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