An Introduction to Islamic Finance: Theory and Practice

193

TABLE 9.3

Comparison of four basic

sukuk

structures

Structure

Asset Type

Description

Benefi

ts

Considerations

Ijarah

• 
  

Existing tangible assets such as plant, machinery, buildings, etc

• 
  

Usufruct rights pertaining to tangible assets can be considered as well

• 
  

Involves a sale and leaseback of tangible assets (or their usufruct rights)

• 
  

Most commonly applied and accepted structure

• 
  

Tradable on secondary market

• 
  

Wide

Shari’ah

acceptability

(AAOIFI

• 
  

  compliant)

  
  

Relatively easy documentation process

• 
  

Identifi

cation of assets

• 
  

100% of assets have to be tangible

• 
  

Assets remain in the ownership of investors till maturity

• 
  

Assets should be unencumbered at time of sale

Head

• 
  

  lease
  and sub

  
  

lease

• 
  

Existing tangible assets

• 
  

Involves long

• and

short

• term leases of

tangible assets

• 
  

Tradable on secondary market

• 
  

Shari’ah

acceptability

• 
  

Template document available

• 
  

Avoid sale of assets which can be sensitive in certain jurisdictions

• 
  

Tangible assets required; with possibility of using suitable operating rights as underlying assets (subject to

Shari’ah

approval)

• 
  

Long

• term lease has to be

for a period of more than 50 years (for

Shari’ah

structuring

purposes)

(Continued)