$1tr Islamic world debt starts to look shaky - Spear's Magazine

$1tr Islamic world debt starts to look shaky

Banking systems in the Muslim world may be heading for testing times, amid growing concerns over the fundamental stability of Islamic finance, a marketplace estimated to be worth up to $1 trillion in outstanding debt.

Banking systems in the Muslim world may be heading for testing times, amid growing concerns over the fundamental stability of Islamic finance, a marketplace estimated to be worth up to $1 trillion in outstanding debt.

At worst, wealthy investors in the Gulf and Asia may flee to the relative safety of Western banks if this Sharia-based market collapses in a wave of debt defaults, bankers in London say.

In one indicator of looming problems, Investment Dar Co, the owner of half of Aston Martin Lagonda, has missed a payment on $100 million of debt, becoming the first Arabian Gulf company to default on Islamic bonds.

Kuwait-based Investment Dar failed to pay a regular distribution due on April 27 to holders of its Islamic bonds maturing in 2010, it said in a statement. The company, which has $3.7 billion of debt outstanding, recently announced that it was looking to restructure its various interests, ranging from real estate to banking, with the help of Credit Suisse.

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