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Ammon News - AMMONNEWS - An “innovative Jordanian application” of the sukuk method of Islamic banking, initiated by the Ministry of Finance and supported by the Japan International Cooperation Agency (JICA), has been recognised by an industry leader in international Islamic finance, according to a statement relased on Thursday.

The JD34 million sukuk, or Sharia (Islamic law)-compliant, interest-free bond, issued to finance the completion of the ministry’s new offices, was closed in October 2016.

The issuance of the Kingdom’s first sovereign sukuk was awarded by the Islamic Finance News, which recognised several unique features of the sukuk that could have consequences for the increasingly important sukuk market, according to a statement from the Finance Ministry and JICA.

JICA provided technical assistance to the Kingdom as it issued its first sovereign sukuk, including facilitating training in Malaysia and Sudan for Jordanian officials.

Japan’s support comes as part of the country’s ongoing assistance to Jordan as it faces challenges caused by regional conflicts and instability, the statement said.

With Islamic law forbidding the charging or payment of interest, the sukuk method has emerged as an increasingly important financial device within Sharia-compliant banking.

While a conventional bond confers ownership over a debt, a sukuk instead grants an investor a share of an asset, which includes a share in both profits and risks.

While still a niche within the world of Islamic banking, a 2014 Thomson Reuters report estimated that $1.814 trillion of assets were being managed in a Sharia-compliant manner that year, with the amount expected to be significantly higher in 2017.