logistics industry development power point ppt.pdf
Sukuk
1. FIN 545
- ISLAMIC FINANCE -
UNIVERSITI TEKNOLOGI MARA (UiTM),
KAMPUS BANDARAYA MELAKA.
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4. • Sukuk is popularly known as an Islamic or
Sharia compliant ‘Bond’ whilst in actual fact; it
is an asset-backed trust certificate.
• Sukuk is a plural of Sakk. Which means “legal
documents, deed, check”. It is an Arabic name
for financial certificate but it can be seen as an
Islamic equivalent of the conventional bonds.
5. • In its simplest form Sukuk is a certificate evidencing
ownership of an asset or its usufruct and was
developed by Sharia experts for the express purpose of
answering the financial world’s demand for a Sharia
compliant debt instrument.
• The development of Sukuk was in response to Sharia’s
prohibition on earning returns from loan contracts
which returns are based on interest.
• Conventional bonds and other derivative instruments
that rely on profiting holders by providing returns
based on interest are therefore unavailable to Muslims
who wish to invest in Sharia compliant investments.
6. • Tradable Sharia - compliant capital market product
providing medium to long-term fixed or variable rates of
return.
• Assessed and rated by international rating agencies, which
investors use as a guideline to assess risk/return
parameters of a Sukuk issue.
• Regular periodic income streams during the investment
period with easy and efficient settlement and a possibility
of capital appreciation of the Sukuk.
• Liquid instruments, tradable in secondary market.
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8. CONVENTIONAL (BOND) ISLAMIC (SUKUK)
Papers which evidence indebtedness issued Papers which evidence in indebtedness,
by the issuer/borrower; an IOU with a ownership and investment issued by the
promise to pay debt at maturity debt Issuer/borrower using Shariah principles
Loan Not a loan: Based on sale, lease,
partnership or agency relationship
Paper in exchange for monies Asset in exchange for monies
Interest Profit / income from asset
Trades – sales of debt instrument Trades – sales of asset
No restriction on utilization off proceeds Utilization of proceeds for Shariah
compliant purpose
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10. • Marketability: Sukuk are monetized real
assets that are liquid, easily transferred and
traded in the financial markets
• Rateability: Sukuk can be easily rated
• Enhanceability: Different Sukuk structures
may allow for credit enhancements
• Versatility: the variety of Sukuk structures
defined in the AAOIFI standards allow for:
structuring across legal and fiscal domains,
fixed and variable income options etc.
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25. • The Fiqh Academy of the OIC in February,
1988
• concept of a Sukuk
‘.. any collection of assets can be represented in a
written note or bond; and
that this bond or note can be sold at a market price
provided that the composition of the group of assets,
represented by the security, consists of a majority of
physical assets and financial rights, with only a
minority being cash and interpersonal debts.’
26. • Malaysia – experience 1st sukuk in 1990 by
Shell MDS Sdn. Bhd (BBA structure)
• Islamic Concept
i. Murabahah (sale and buy back)
ii. Ijarah (leasing)
iii. Bai al-salam (advanced payment)
iv. Bai al-istisna’ (purchase order)
v. Musharakah (partnership),
vi. Mudharabah (profit sharing)
vii. Wakalah (agency)
27. Sukuk issued in the global markets (2008)
BBA, 1.43%
Salam, 0.46%
Istisna', 1.28% Murabahah,
7.38%
Musharakah, Ijarah, 48.29%
32.59%
Mudharabah,
8.58%
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29. • Malaysia is undoubtedly the pioneer of the Islamic
capital markets.
• The Shari’ah Advisory Council of the Securities
Commission of Malaysia governs the principles on
which Sukuk should be issued.
• It recognizes Bai Dayn or debt trading as one of the
acceptable principles for Sukuk issuances whereby
Shari’ah compliant cash receivables arising from
contracts such as Murabahah, BaiBithamanAjil
(BBA), Ijarah or Istisna' are converted into tradable
debt instruments.
30. Types of sukuk issued in Malaysia (2008)
Source: SC, Kuwait Finance House
18% Mudharabah
BBA
44%
12% Istisna
Ijarah
10% Murabahah
14% Musharakah
1%
31. Issuer Amount Year Transaction Highlights Tenor
(Years )
RM125 1990 World’s first ringgit -
Shell MDS million Sukukissue by foreignowned,
(US$33 non-Islamic
million) company
Kumpulan Guthrie US$150 2001 World’s first global 8
Bhd million corporate Sukuk
Government of US$ 600 2002 World’s first global 5
Malaysia million sovereign Sukuk
International Finance RM500 2004 First ringgit Sukukissue 3
Corporation (World million by supranational agency
Bank) (US$132
million)
32. Cagamas MBS Bhd RM2.05 2005 World’s first Islamic 13
billion residential mortgagebacked
(US$540 securities
million)
KhazanahNasional US$750 2006 World’s first 5
(Rafflesia million exchangeable Sukuk
Capital Ltd)
Nucleus Avenue RM8 billion 2007 First Hybrid Sukukin the 50
(Malakoff (US$2.5 World
Corporation) billion)
MaybankBerhad US$300 2007 World’s first 10
million international
subordinated Sukuk
Binariang GSM RM15.35 2007 Largest-ever Sukukissue 20
billion in the world
(US$4.8 bill)