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sir i read the techinical article on islamic finance which was explaining sukuk i could not understand the difference between asset backed and asset based sukuk? since in both of them we are purchasing in ASSET BASED SUKUK we are prucashing asset and leasing it IN ASSET BACKED SUKUK we are purchasing portfolio of asset which is already generating value is that the only difference
Sir could you briefly explain the difference between asset backed and asset based sukuk?
The difference is really just as you have written. With asset based, the asset is purchased and then leased back to the company that is was purchased from (so for that company it effectively a sale and leaseback). With asset backed, they are purchasing assets that are already earning income.
(The article is really a bit over detailed (it wasn’t written by the examining team) and I cannot imagine any exam question ever expecting the distinction between the two 🙂 )
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