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Islamic Capital Market -Sukuk-Sukuk Ijarah: Global Acceptance and Structuring Considerations
Key Concept: Sukuk Ijarah's global acceptance stems from its representation of ownership rights in tangible, non-financial assets.
Core Principles:
Key Concept: Sukuk Ijarah's global acceptance stems from its representation of ownership rights in tangible, non-financial assets.
Core Principles:
- Asset-Based Nature: Sukuk Ijarah are structured to reflect ownership of a specific asset (e.g., real estate, equipment), making them attractive to investors seeking tangible backing.
- Non-Financial Asset Focus: The underlying asset is typically non-financial, further distinguishing it from conventional debt instruments.
- Not Necessarily Asset-Backed Securitization: While asset-based, Sukuk Ijarah structures may not qualify as true asset-backed securitizations due to specific structural features.
- 'True Sale' Implications: The sale of the asset from the originator to the SPV/issuer is a critical element.
- Impact of 'Put Option': The presence of a 'put option' (giving the originator the right to repurchase the asset) can negate the 'true sale' characteristic.
- Why it Matters: If a 'true sale' is not achieved, the Sukuk Ijarah may be reclassified as a debt instrument rather than a true ownership representation.
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