Presentation on theme: "Innovative Sukuk Structures & Their Impact on Development"— Presentation transcript:
1Innovative Sukuk Structures & Their Impact on Development
2Outline Growing Role of Sukuk in Capital Markets Deepening of Primary & Secondary Sukuk Markets and Vehicles for Broader Public ParticipationRationale for Purpose Driven & Objective Focused SukukPrivatization Vehicle for Assets Backed SukukInstitutional Needs & Public Welfare GoalsSecuritization of Privatization AssetsSuggested Modeling of New Sukuk Structures
3Privatization – A New Direction For Sukuk Development New opportunities for Sukuk StructuresSukuk for the PublicPrivatized Assets Based Sovereign Sukuk
4Growth of Primary & Secondary Sukuk Markets Recently launched Sukuk in Asia and the Middle East have the potential of setting the stage for new fixed income securities that could be useful for the developing countries in managing their heavy debt burden and initiating a new growth strategy based on securitization of privatized government assets.New Sukuk Structures are a viable alternative for privatization of government owned assets in developing Muslim countries. Case studies of public utilities and other revenue generating entities.Sukuk ownership certificates are the alternative to widely marketed savings bonds in these countries.
6Rationale For Sukuk Issuance Diversification Source: Zawya Sukuk Monitor 2011
7Privatization Vehicle for Assets Backed Sukuk A true sale between the originator and the special purpose vehicle (SPV) that issues the Sukuk. Assets to be owned by the SPV, returns derived from assets; asset prices may vary over time.The potential of hybrid Sukuk structures emphasizing Wakala principles.The pace of new Sukuk launches has picked up after the decline witnessed because of the global financial crisis of 2008 but the supply of new Sukuk still falls short of the demand from investors for fixed income securities.
9Linkage of the Real & Financial Sectors The absence of a viable secondary marketIjara based and non-Ijara based SukukA pivotal role in project financingA tool for treasury management and portfolio management functions for the financial institutions.
10New Sukuk StructuresThe potential of hybrid Sukuk structures emphasizing Wakala principles:Recommendations for effective placement of lower yield sovereign Sukuk in foreign currencies.In the light of 2008 AAOIFI rulings on Sukuk, unique Sharia issues associated with commonly used contracts such as sales, lease, partnership, and agency.Contrasted with Sukuk classifications based on commercial functions such as exchangeability and convertibility.