S&P: Islamic Investors' Risk Tolerance Will Determine Demand For Sharia Fund Ratings

Press Release

Islamic Investors' Risk Tolerance Will Determine Demand For Sharia Fund Ratings,
Report Says

LONDON, May 4, 2010--The economic boom in the Gulf Cooperation Council (GCC) region
has fueled the emergence of Islamic finance in the international market in the past
decade. Revenue growth in this region has particularly benefited the asset
management sector, as Standard & Poor's noted in a report published today (see "Using Fund Ratings To Assess Credit And Market Risks In Sharia Funds").

The Middle East is by far the largest market for Sharia-compliant funds, but
conventional players in Europe, South Africa, and the U.S. have also launched a
number of funds that comply with Sharia law during past years, enhancing their
product range to meet the specific requirements of Islamic investors seeking to
invest in this asset class.

The number of product types remains limited, which Standard & Poor's Ratings
Services believes is largely due to the nascent nature of Sharia funds. Funds also
have to be invested in ways that are permitted under Islamic law. Sharia funds,
unlike traditional bond funds, do not invest in conventional rated fixed-income
securities because these are, by definition, financial instruments that accumulate
interest and are therefore not considered Sharia-compliant.

In May 2010, Standard & Poor's assigned its first 'AAf/S1+' fund credit and
volatility ratings to a newly established Sharia fund, EFH Funds SCA
SICAV-SIF-Liquidity Subfund, domiciled in Luxembourg and managed by European Finance
House, the European financial arm of Qatar Islamic Bank.

We see rating Sharia funds as a way to enhance credit-risk awareness in this asset
class. Most Sharia funds are equity-, commodity-, or lease finance-based funds, but
some of them, despite being invested in Islamic financial instruments, show some
similarities with fixed-income funds.