All posts related to KL Conference on Islamic Wealth Management & Financial Planning 2018 - KLC-IWM-2018

Saturday, 21 May 2011

Sukuk Using Al-Ijarah Structure

Stage 1: Contract of Cash Sale (Bay’ Mutlakah)
    − SPV purchases property (e.g. hospitals) from obligator (government) (1)
    − The assets purchased by the SPV is funded by the issuance of sukuk (trust certificates) which represents beneficial
       ownership in the assets and the lease (3)
    − Government received cash proceeds (7)

Stage 2: Contract of Leasing (Ijarah)
    − SPV rents property to the government for specified period (2)
    − SPV collects rentals (6)

Stage 3: During the tenure
    − SPV passed the rentals to investors (9) – periodic distribution/coupon

Stage 4: At maturity
    − SPV sells the property to the government at an agreed price
    − Government pays cash to SPV
    − SPV simultaneously pay investors cash for sukuk redemption

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