Asset backed sukuk

This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.

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February 8, 2020 at 5:10 pm #561102
rimshy
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Please explain how asset backed sukuk would be the same kind of arrangement as securitization where assets are transferred to SPV and returns and repayments are financed by the income from.the assets..

Also how is sukuk like sale and lease back please explain above points linked to securitization
February 9, 2020 at 10:32 am #561156
John Moffat
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It is asset based (not asset backed) sukuks that are like sale and lease back.
The company sells the asset to the SPV (and so gets cash immediately) and then pays rent to the SPV so as to carry on using the asset. This is the same idea as sale and leaseback.

Securitisation has a similar effect and a good example was David Bowie (the singer). He was getting income each year from royalties on his recordings. He securitised the income by selling bonds to investors – he got cash immediately from the investors and from then on the investors received the royalties each year.
February 11, 2020 at 9:56 pm #561422
rimshy
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The example u gave for singer selling the bonds to investors means the investors will be SPV in that case ?…can u elaborate a bit more about SPV please
February 12, 2020 at 7:10 am #561447
John Moffat
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There is no SPV in the case of securitisation.

I don’t know what you want me to elaborate about it because there isn’t really anything to add. Have you read the technical article on it all on the ACCA website?
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