39 Questions
What is the main focus of the text?
The issuance of GOP Ijarah Sukuk
Why are securities representing a loan or debt (such as Bonds) stated to be non-tradeable?
They cannot be sold or purchased once issued
What is the purpose of the Islamic Money Market?
To support the issuance and trading of Shariah-compliant financial instruments
What type of Sukuk is specifically mentioned in the text?
Ijarah Sukuk
In which country is the issuance of Sovereign Sukuk discussed?
Pakistan
What is the focus of the section 'The Future – Asset Light Sukuk Issuances'?
The advantages of adopting asset-light Sukuk structures
What is the primary reason for preferring Sukuk over traditional securities representing a loan or debt?
Tradeability in the secondary market
What is the meaning of 'Sukuk'?
Certificates representing undivided shares in ownership of tangible assets, usufruct and services
What is the key difference between conventional bonds and Sukuk?
Conventional bonds are not Shariah compliant while Sukuk are compliant with Islamic finance principles
What does the issuance of Sukuk generally entitle holders to?
Share in the revenues generated by the Sukuk assets
What types of projects can Sovereign and Quasi sovereign Sukuk be used for?
Budget financing and infrastructure project financing
Which type of Sukuk is usually short term and used for financing commodity operations?
Salam/Istisna
What happens when the Sukuk is reopened?
The issue size increases, while the coupon rate and maturity remain the same
In what way can Hybrid Sukuk be structured?
Combination of two modes such as Musharakah and Salam/Istisna
What do investors bid on in case of reopening of Sukuk?
Purchase price
What is created when a pool of tangible and intangible assets is established for Sukuk?
(A pool) where a significant portion of tangible asset is available
In Islamic context, what happens at the time of reopening of Sukuk?
The transaction is concluded by purchasing additional share in the identified asset on Musharaka basis, which is then given on rent/Ijarah
What is the primary purpose of Corporate/Private/FI Sector Sukuk issuance?
(Funding) for sustainable growth and short term equity/JV financing
What differs in the structure of reopening of Sukuk compared to the first issue?
The purchase price components
What should be at least 1 year from the reopening date at the time of reopening of the Sukuk?
Remaining tenor of the Sukuk
Which assets have Sukuks been issued under Ijarah structure?
All of the above
What percentage of Total Global Sukuk Issuances is Sovereign Sukuk from 2001 to 2019?
15%
What is the proposed underlying mode for 'The Future- Asset Light Sukuk'?
Salam / Istisna
Which type of Sukuk is not tradable?
Hybrid Sukuk
What is the period for rental payments in the Ijarah Agreement of GOP Ijarah Sukuk?
6 months
What does the Service Agency Agreement entail in GOP Ijarah Sukuk?
Routine maintenance by the Lessee and major maintenance by the Lessor
What does the concept of 'reopening of Sukuk' refer to?
Seeking additional funds under the same terms and conditions
What is the role of PDSCL in GOP Ijarah Sukuk?
Acting as Investment Agent of Investors and Issuer of the Sukuk
Which entity executes an Agency Agreement with PDSCL to act as a Paying Agent in GOP Ijarah Sukuk?
SBP-BSC
What is the objective of GOP Sukuk in line with the constitution of Pakistan?
To eliminate riba from the society
What distinguishes Sukuks from conventional bonds?
Sukuks are backed by actual underlying assets
What is the underlying asset for the Future-Asset Light Sukuk?
Crude Oil and Petroleum Products
In the Salam/Istisna structure, who will make the advance payment for the purchase of Crude/Refined Oil?
Sukuk holders
What is the mode of Sukuk issuance mentioned in the text?
Murabaha
Who will be involved in the sale of acquired Oil products to GOP on deferred Murabaha in the Murabaha structure?
Investment Agent
What is the tradability status of Sukuk as per the details provided?
Not tradable
Which parties are involved in the Future-Asset Light Sukuk related to oil products?
Sukuk holders, Investment Agent, State-owned OMCs, Oil Refineries
What is the financing method mentioned for Sukuk linked with local revenue collection?
Bai Muajjal
Which type of Sukuk is mentioned for Sustainable Development in the text?
Green Sukuk
Study Notes
Characteristics of Sukuk
- Sukuk represents ownership in an asset, not a debt obligation, making it non-tradeable
- Meaning of 'Sukuk': certificates of equal value representing undivided shares in the ownership of tangible assets
- Key difference between conventional bonds and Sukuk: Sukuk represents ownership, while bonds represent debt
Types of Sukuk
- Ijarah Sukuk: usually short-term, used for financing commodity operations
- Asset Light Sukuk: mentioned for the future
- Hybrid Sukuk: can be structured in various ways
- Salam/Istisna Sukuk: involves advance payment for the purchase of Crude/Refined Oil
- Murabaha Sukuk: involves sale of acquired Oil products to GOP on deferred Murabaha
- Sovereign Sukuk: issued by governments, e.g., in Pakistan
- Quasi Sovereign Sukuk: issued by government entities
- Corporate/Private/FI Sector Sukuk: issued by companies and financial institutions, primarily for financing operations
- Sukuk for Sustainable Development: mentioned in the text
Characteristics of Sukuk Issuance
- Issuance of Sukuk generally entitles holders to a proportionate ownership in the underlying assets
- Key advantage of Sukuk over traditional securities: Sukuk represents ownership, aligning with Islamic principles
- Reopening of Sukuk: allows for additional issuance of Sukuk, with differences in structure compared to the first issue
- In Islamic context, reopening of Sukuk involves a new sale and purchase agreement
Sukuk Structure and Participants
- GOP Ijarah Sukuk: involves a Service Agency Agreement, and PDSCL acts as a Paying Agent
- In Salam/Istisna structure, the buyer makes the advance payment for the purchase of Crude/Refined Oil
- In Murabaha structure, GOP will be involved in the sale of acquired Oil products on deferred Murabaha
- Parties involved in the Future-Asset Light Sukuk: relate to oil products
- Financing method for Sukuk linked with local revenue collection: mentioned in the text
Test your knowledge on the tradability of different types of Sukuk, including Ijarah, Murabaha, Musharakah, Istisna/Salam, Services, and Hybrid Sukuk, as well as their conditions for tradability.
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