Abstract
This chapter provides a general discussion on the types of Sukuk, particularly their classification and structures in the Islamic Capital Market (ICM). In the ICM, Sukuk can be classified into two different categories. The first classification is based on the type of structure such as asset-based or asset-backed, whereas the second classification is based on specific Shariah contracts such as murabahah and ijarah. Both structures are used in many Sukuk issuances in the ICM, such as corporate issuances or sovereign issuances in different currency denominations. This chapter covers several important facets of Sukuk, including types of Sukuk such as asset-based and asset-backed, classification of Sukuk based on Shariah contracts such as Sukuk mudarabah and Sukuk musharakah, and many others.
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- 1.
Sun Finance is leading financial services provider based in Hong Kong. According to Thomson Reuters, Sun Finance major into banking and investment services with consumer lending as one of its major business activities. The Company offers diversified financial products including: personal loans, home mortgages, equity financing, equity mortgage, corporate finance and SME lending. Besides its main mission in offering a wide range of credit services the company also highlighted the importance of staff training in order with a good reputation base on friendly service and make sure customer are satisfactory on the product. Source: Thomson Reuters Eikon. Sun Finance Ltd. Website: http://www.sunfinance.com.hk/en/about.asp.
- 2.
Tamweel PJSC is a company engaged in sharia—compliant financing and investment activities at the same time involved in the business of property leasing and trading; based in United Arab Emirates (UAE). The Company are divided into two (2) business segment namely the Islamic financing and investing activities segment which handles Islamic financing and investment activities, such as Ijara, Murabaha and Istisna , and the Real Estate and investment activities segment is principally involved in the leasing and trading of properties and related activities. Tamweel is known in offering products including commercial property finance, home finance plus, home finance takeover program, home refinance program and non-residents program. As of December 31, 2011, the Company’s wholly owned subsidiaries included Tamweel Properties & Investments LLC, Tahfeez Middle East Limited, Tamweel Funding Limited, Tamweel Sukuk Limited and Tamweel ESOT Limited. The Company is a wholly owned subsidiary of Dubai Islamic Bank PJSC. Source: Thomson Reuters Eikon.
- 3.
East Cameron Partners (ECP) is a company dedicated in oil and gas expertise based in the United States. In 2008, East Cameron Partners became infamous first milestone into the Sukuk industry. East Cameron was the first US-based company that had issued an asset-backed Sukuk namely East Cameron Gas Sukuk through oil and gas as the asset in transaction. However, in 2008 ECP filed for bankruptcy protection, claiming its inability to pay the periodic returns on its USD166 million Sukuk issued in June 2006. Source: Thomson Reuters Eikon.
- 4.
Ambang Sentosa Sdn. Bhd. is a private Malaysian company registered under the Companies Commission of Malaysia (CCM). The Company was registered under the CCM on the 6 June 2002 based in Kuala Lumpur, Malaysia. According to CCM, the Company’s nature of business is registered as to implement an asset-backed securitisation services which involves the investment, management and monitoring of a pool of assets to ensure collectability of the assets . Source: Companies Commission of Malaysia.
- 5.
Golden Crop Returns Bhd. (formerly known as Golden Crop Returns Sdn. Bhd.) is a registered Malaysian company under the Companies Commission of Malaysia (CCM). The Company was registered under the CCM on the 14 May 2005 based in Kuala Lumpur, Malaysia. The Company change into public company known as Golden Crop Returns Bhd on 31 May 2005. According to CCM, the Company’s nature of business was registered as to implement an asset securitisation transaction. According to CCM, the company is winding up. Source: Companies Commission of Malaysia.
- 6.
Salam is governed by some Shariah rules such rules are full payment by the buyer at the time concluding the contract , specification of the underlying asset in term of quantity, quality, agreement on the date and place of delivery , and others as stipulated by Shariah .
- 7.
1. The Primary subscriber will enter into an Istisna ’ Purchase Agreement with SapuraCrest in respect of the construction of the Vessel “ Istisna ’ Asset*” wherein the primary subscriber will appoint SapuraCrest to construct the Istisna ’ Asset and take delivery of such Istisna ’ Asset at the relevant Istisna ’ Purchase Price.
2. The Primary Subscriber shall first credit the full Istisna ’ Purchase Price proceeds into a notional marginal deposit account held by SapuraCrest with Primary Subscriber. The Purchase Price proceeds shall be transferred from the marginal deposit account to the Proceeds Account in two installments upon compliance with the Conditions Precedent.
3. Immediately after the execution of the istisna ’ Purchase Agreement , the Primary Subscriber and the Issuer will enter into an istisna ’ Sale Agreement in respect of the istisna ’ Asset wherein the Issuer will agree to purchase and accept delivery of the istisna ’ Asset from the Primary Subscriber at the istisna ’ Sale Price.
4. The settlement of the istisna ’ Sale Price by the Issuer shall be evidenced by the issuance of the istisna Bonds , which is payable according to an agreed payment schedule.
5. The Islamic Bond may be traded in the secondary market under the Syariah principle of Bai’ Al-Dayn (i.e. debt trading).
6. The Issuer shall enter into an arrangement (“BBA Arrangement”) with SapuraCrest under the Syariah principle of Bai’ Bithaman Ajil wherein the Issuer shall sell the Vessel to SapuraCrest at an agreed sale price (“BBA Sale Price”). The BBA Sale Price shall be paid by SapuraCrest to the Issuer on a deferred payment basis. The identified asset is the Vessel to be constructed in accordance with the construction contract entered into between SapuraCrest and Huisman Sembawang Consortium dated 20 December 2004 and the variation order dated 15 August 2005.
References
AAOIFI. (2010). Shariah Standards. Accounting and Auditing Organization for Islamic Financial Institutions, Kingdom of Bahrain.
Dar Al Istithmar. (2006). Sukuk: An Introduction to the Underlying Principles and Structure. Oxford, UK: Dar Al Istithmar.
Lahsasna. (2009). Sukuk as Financial Instruments in Financing Business Projects. International Seminar on Muamalat, Islamic Economics and Finance (SMEKI 09), Bangi, Malaysia.
Securities Commission. (2004). Guidelines on the Issuance of Asset-Backed Securities. Retrieved at: http://www.sc.com.my/wp-content/uploads/eng/html/resources/guidelines/guidelines_assetbacked260704.pdf.
Securities Commission. (2011). Islamic Securities Guidelines (Sukuk Guidelines) 17. Revised 12 July 2011, Effective 12 August 2011.
Usmani, M. T. (1999). An Introduction to Islamic Finance. Kluwer Law International.
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Lahsasna, A., Hassan, M.K., Ahmad, R. (2018). Types of Sukuk, Their Classification and Structure in Islamic Capital Market. In: Forward Lease Sukuk in Islamic Capital Markets. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-94262-9_4
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DOI: https://doi.org/10.1007/978-3-319-94262-9_4
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