TABLE 9.3
ContinuedStructureAsset TypeDescriptionBenefitsWakalaIjarahassetsShari’ah- compliant
equity instrumentsSukukcertificatesInvolves appointing the obligor as investment agent to manage the assets for a feeEasily executable if Shari’ah-compliant assetsare availableUsed by supranationals withShari’ah-compliantasset portfoliosIdentification of assets andsubstitutionAssets need to have value at or greater than amount raisedIstisna’Revenue-generating agreementsLinked to business activityTransfer of certain rights and obligations to IssuerIncome from agreements are used to service the periodic paymentsShari’ahacceptabilityNo tangible assets requiredAssets can be long- term
agreementsTemplate documents availableIssuer does not give up operating control of the businessIdentification of assets andsuitabilitySize ofsukuklimited to size ofbusiness and require significantdue diligence on businessNon- Middle Eastern investors
may require more education on the structureIntroduces “business” risks (performance risk of company) which is not a typical credit riskSource: HSBC Amanah, Malaysia.
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