First UK sovereign Islamic 'bonds' to be issued "in the coming weeks" after issuing banks appointed

It has also published a list of four banks that will lead the sale of the sukuk together with HSBC, which was previously appointed to structure the new product. These are Barwa Bank of Qatar, Malaysia's CIMB, National Bank of Abu Dhabi and Standard Chartered.

The UK government's intention to issue sovereign sukuk worth £200 million was announced by the prime minister at the World Islamic Economic Forum in London in October 2013, and is part of its stated intention to develop the UK as a hub of Islamic finance. Last year was the first time this annual conference was not held in a Muslim country.

Sukuk are financial instruments that resemble government-issued sovereign bonds while adhering to the principles of Islamic law, paying investors a fixed return based on the profit generated by an underlying asset. Islamic, or Shari'a, finance prohibits interest, or 'riba', and does not allow one party to make money unjustly at another's expense. In addition, wealth can only be generated through trade and investment in 'real' assets, such as infrastructure, though trade in some assets is banned by Shari'a.

The UK sovereign sukuk will use an Al-Ijara structure, under which investors receive a share in the agreed rental income of an underlying asset. Al-Ijara is the most common structure for sovereign sukuk. The UK's sukuk will have a maturity of five years and be underpinned by rental income from three central government office properties, which it said would remain in government ownership during the lifetime of the sukuk.

Further details of the transaction will be announced by participating banks and the UK's Debt Management Office "in due course", the government said.