Yemen announced Saturday the first sukuk, Islamic bonds, had been issued as the country is seeking to benefit from the surplus liquidity of the Islamic banks to finance big investments that can help boost the national economy.

The Islamic Sukuk Unit at the Central Bank of Yemen was responsible for the issuance which was part of a one-year programme introducing sukuk worth YR 100 billion by the end of 2011.

Every three months, the unit will issue sukuk worth $ 125 million, officials at the Unit said on Thursday.

The first tranche was of salam and istina types and will be offered to the Islamic banks which are already seeking Sharia-compliant ways to invest in.

With the sukuk, the Islamic banks will finance road and oil projects.

There are four Islamic banks in the country including Tadhamon International Islamic Bank, the biggest bank in the country in terms of assets, and Saba Islamic Bank, the biggest lender.

The others are Shamil Bank of Yemen and Bahrain and Islamic Bank of Yemen for Finance and Investment, the first bank established in 1995. Also, there are two Islamic windows within Yemen Kuwait Bank for Trade and Investment and CAC Bank. Under the Yemeni Islamic banking law 21 of 1996 and its amended version law 16 of 2009, a non-Islamic bank can open an Islamic window.

The Islamic banks here say sukuk come on time and will help finance projects that at the end help boost the country's economy.

With sukuk, we can ensure funds and incomes will directly help development and the people and don’t go to the Central Bank to tackle the state budge deficit, they say.