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Dear sir,
I believe this post got deleted so I’m reposting this qn again regarding the technical article regarding islamic financeCan you pls explain with an eg what an asset backed sukuk is? I’ve read about mudaraba sukuks, murabaha sukuks etc but what is an asset backed one?
Also, am I right in saying an ijara sukuk is only asset based and doesn’t apply to asset backed sukuk?
Lastly is an ijara sukuk like a finance lease with a hint of equity( as in subscription)?
Thanks
An asset backed sukuk is where the sukuk holders have the legal ownership of the underlying assets. The income they get is the revenue generated by the assets.
You are correct with regard to your last two statements.
(Do not over-worry about Islamic Finance – the article was not written by the examiner, and although there have been parts of questions relating to Islamic finance, they have been few and it is never likely to be a major part of a question in terms of the marks.)
Good day sir, may i know for :
1) Asset based sukuk is like sukuk holder will pay some money to SPV and SPV will then use the money to buy an asset so that seller can get the collect money immediately. Then ownership will be transfer from seller to SPV. Then SPV will give it as lease to the seller back. Since it is lease, so the seller will pay rental SPV. Once SPV collected the money, they will distribute it to the sukuk holder back.
2) Asset-backed sukuk is the same concept but just that instead of SPV buying the asset from seller and giving back for lease to them but this method is like SPV will use the money received from Sukuk Holder and buy leased asset . Meaning asset which is already generating income by giving it for lease. SPV take over the ownership. So the income generated from leasing will be distributed to sukuk holder.
Is my understanding correct sir ?
a) Asset-backed sukuk – What does they mean by (As the obligor is the lessee, the sukuk holders have recourse to him if default occurs)
b) Asset-backed sukuk – If the returns fail, the sukuk holders will suffer the losses is it?c) The purpose of both type of sukuk is to provide immediate cash collected from sukuk holder to finance seller/issuer of the asset?
d) For Asset-backed sukuk the portfolio of asset will be sold by whom? seller just like Asset based sukuk
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