Skip to main content

Sukuk Structuring Models

The Islamic finance industry has witnessed significant growth over the years, with sukuk issuance reaching unprecedented levels. Sukuk, or Islamic bonds, have become a popular instrument for governments and corporates to raise capital while complying with Shariah principles. As the demand for sukuk continues to rise, the need for sophisticated structuring models has become increasingly important.

Sukuk Structure: A Comprehensive Overview​

A well-structured sukuk product is essential to attract investors and ensure its success in the market. Sukuk structuring models can be categorized into different types based on their underlying assets, which include:

Murabaha-based Sukuk​

Murabaha is an Islamic financing method where a financier purchases an asset from a supplier at a marked-up price and then sells it to the customer at that price plus a profit margin. A murabaha-based sukuk structure involves purchasing a pool of underlying assets and then issuing certificates representing ownership in those assets.

Ijara-based Sukuk​

Ijara is another Islamic financing method where an asset owner leases their property or asset to a lessee for a specified period in exchange for rental payments. An ijara-based sukuk structure involves leasing a pool of underlying assets and issuing certificates representing ownership in those assets, with the lessee making rental payments.

Diminishing Musharaka-based Sukuk​

A diminishing musharaka is an Islamic financing method where two parties jointly invest in an asset, with one party gradually buying out the other's share over time. A diminishing musharaka-based sukuk structure involves establishing a joint venture to purchase a pool of underlying assets and then issuing certificates representing ownership in those assets, with investors gradually buying out the issuer's share.

Commodity Murabaha-based Sukuk​

A commodity murabaha is an Islamic financing method where a financier purchases commodities at prevailing market prices and sells them to customers at the same price plus a profit margin. A commodity murabaha-based sukuk structure involves purchasing a pool of commodities and issuing certificates representing ownership in those assets.

Takaful-based Sukuk​

Takaful, or Islamic insurance, is based on the principle of mutual assistance among participants. A takaful-based sukuk structure involves establishing a takaful contract where participants contribute to a shared fund to cover potential losses, with a portion of the contributions being used to pay off investors.

These sukuk structuring models provide a framework for issuers to create innovative and Shariah-compliant products that cater to the diverse needs of investors. By understanding these structures, market participants can navigate the complexities of Islamic finance and capitalize on emerging opportunities in this rapidly growing industry.