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Overview ?
Sukuk is an investment instrument issued by asset leasing companies that conforms to the principles of Islamic banking. It represents ownership of an asset or the right to benefit from it, providing investors with fixed or variable returns at specified intervals. Sukuk can be traded on secondary markets.
Features
Investors know the exact lease return they will receive at the end of the term before making the investment.
- Investors purchasing lease certificates earn income based on their proportional share of the underlying assets or rights issued.
- Lease certificates are issued in two forms: public offering and issuance to qualified investors. Even if not a qualified investor, one can open an investment account to purchase lease certificates issued through public offerings.
- It is backed by a tangible asset or right, making it a secure investment alternative, especially for participation banking clients.
- It can provide fixed or variable returns and is tradable on secondary markets.
- Lease certificates can be used as collateral.
- It offers tax advantages.
Types of certificates
- Ownership-based lease certificate (Ijara sukuk)
- Management contract-based lease certificate (Wakala sukuk)
- Buy-sell-based lease certificate (Murabaha sukuk)
- Partnership-based lease certificate (Mudaraba/Musharaka sukuk)
- Construction contract-based lease certificate (Istisna sukuk)
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