| Sukuk ijara, a form of Islamic bond, became the dominant bond structure in the $1tn Islamic finance industry in 2008, ratings agency Moody’s said in a recent report. Bumper oil earnings in the Gulf and rising demand for ethical investments have boosted the profile of the three-decade-old Islamic finance industry in recent years from a niche sector to one with growing international reach. Under sukuk ijara, the seller sells assets to the issuer who will issue sukuk to fund the purchase. The sukuk represents beneficial rights in the assets and sukuk holders have an undivided proportionate beneficial interest in the assets. Its simple structure and the wide range of assets that it can be structured with make ijara attractive. Both governments and corporates can issue ijara. Its popularity has also surged after landmark 2008 ruling by a top Islamic finance body that some hugely popular profit-sharing structures were not Shariah-compliant. |
