Over the past three years, a number of shariah-compliant securities (bonds) have been issued. Each new sukuk issue represented a new milestone in Islamic financing as bankers, issuers, lawyers, rating agencies and shariah scholars joined forces to bring to the market new products that emulated existing products in terms of economic returns, but at the same time conforming to the principles of Islamic shariah law.
The issuers are government and quasi-government entities, supra-nationals and corporates. The structures are not uniform. Various structures have been created using a combination of well-known shariah concepts such as istisna'a, Ijara, musharaka and mudharaba to achieve these results, with the primary driver being, typically, what the asset underlying the sukuk is and how the cashflows will be generated to repay the holders of the sukuk.
The sukuk issued by the Islamic Development Bank for example used a sale agreement to transfer shariah-compliant financings to the...