sukuk structuring and convenience - by anwar soubra - icompetences ifc2012
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Monday 7 January 2013 1 Anwar Misbah Soubra
Sukuk Structuring &
Convenience to Finance Economic Ac5vi5es
Monday 7 January 2013 2 Anwar Misbah Soubra
-‐
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
100 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
336 780 979 5 717 7 210
12 065
26 797
47 000
14 900
33 484
51 628
84 690
97 103
Mn USD
Sukuk Issued 2000 -‐ August 2012
Monday 7 January 2013 3 Anwar Misbah Soubra
336 780 979 5 717 7 210
12 065
26 797
47 000
14 900
33 484
51 628
84 690
97 103
40 000-‐
20 000-‐
-‐
20 000
40 000
60 000
80 000
100 000
120 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Mn USD
Sukuk Issued 2000 -‐ August 2012
Monday 7 January 2013 4 Anwar Misbah Soubra
132,14%
25,51%
483,96%
26,12%
67,34%
122,11%
75,39%
-‐68,30%
124,72%
54,19% 64,04%
-‐100,00%
0,00%
100,00%
200,00%
300,00%
400,00%
500,00%
600,00%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Sukuk Growth in % 2001 -‐ 2011
Monday 7 January 2013 5 Anwar Misbah Soubra
-‐ 10 20 30 40 50 60 70 80 90
2008
2009
2010
2011
2012
Corporate
Sovereign
Monday 7 January 2013 6 Anwar Misbah Soubra
12
33
61
71
59
88
67
39
29
41
-‐
10
20
30
40
50
60
70
80
90
100
2008 2009 2010 2011 2012 Monday 7 January 2013 7 Anwar Misbah Soubra
-‐
10,00
20,00
30,00
40,00
50,00
60,00
70,00
80,00
Malaysia Qatar UAE Indonesia KSA Bahrain Pakistan Misc. Kuwait Kazakstan Thailand France
2008
2009
2010
2011
Monday 7 January 2013 8 Anwar Misbah Soubra
AREA 2008 2009 2010 2011
S E ASIA 27.60 73.12 81.90 74.06
GCC 61.80 23.91 15.99 22.95
ASIA 9.10 1.11 2.07 2.77
M E -‐ -‐ -‐ 0.17
AFRICA -‐ 0.07 0.02 0.05
EUROPE 1.50 -‐ 0.02 -‐
USA -‐ 1.79 -‐ -‐
TOTAL 100.00 100.00 100.00 100.00
Monday 7 January 2013 9 Anwar Misbah Soubra
27,60
73,12
81,90
74,06
61,80
23,91
15,99
22,95
-‐
10,00
20,00
30,00
40,00
50,00
60,00
70,00
80,00
90,00
2008 2009 2010 2011
S E ASIA
GCC
Monday 7 January 2013 10 Anwar Misbah Soubra
-‐
10,00
20,00
30,00
40,00
50,00
60,00
70,00
80,00
MYR USD IDR IRR SAR QAR SGD PKR BHD BND GMD GBP AED Others
2009
2010
2011
Monday 7 January 2013 11 Anwar Misbah Soubra
-‐
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
Murabaha Ijara Bai Ajil Wakala Musharaka Salam Eina Mudaraba Bai Dayn Is]sna
38 262
21 901
9 612
6 023 6 824
537 97 1 409
7 19
2009
2010
2011
Monday 7 January 2013 12 Anwar Misbah Soubra
-‐
10,0
20,0
30,0
40,0
50,0
60,0
70,0
Gov. Inst. Others Financial Services
Power & U]lity & IT
Real Est. & Const.
Transp & Shipping
Tourism & Services
Oil & Gas Industrial & Cement
Consumer & Auto
Agri. & Food
2008
2009
2010
2011
Monday 7 January 2013 13 Anwar Misbah Soubra
Categories of Par]cipants
• Originator and the SPV with the mul]ple roles for both en]]es.
• Sukuk holders as investors. • Third par]es like guarantor or second obligor, Shari’a Board
and legal advisor. • Financial ins]tu]ons and their varying and complementary
roles.
Monday 7 January 2013 14 Anwar Misbah Soubra
Monday 7 January 2013 15
ORIGINATOR Seller of Assets
SPV = TRUST (REGISTRATION OF
ASSETS OWNERSHIP & INVESTMENT)
INVESTORS SUKUK HOLDERS
Sukuk issue(1)
Sukuk Profits and redemp5on (6)
(2) Sukuk Proceeds
Sale of Assets (3)
(4) Payment of Assets Value
(5) Profits and Redemp5on Basic Structure of Sukuk
Anwar Misbah Soubra
Structuring • Structuring is a complex financial engineering exercise to built and
establish a Shari’a compliant financing tool and mechanism especially tailored for business enterprises from various sectors, on a case by case basis, that requires the par]cipa]on of mul] professional disciplines including:
• Finance • Accoun]ng • Economics • Taxa]on • Shari’a • Law • Mathema]cs • Banking • Marke]ng • Capital Markets • Risk Management
Monday 7 January 2013 16 Anwar Misbah Soubra
Related Par]es
Originator/Issuer/Investors • Originator • SPV • Sukuk holders • Issuer • Trustee • Sale undertaker • Lessor • Lessee • Servicing agent • Investment agent • Manager • Purchase undertaking obligor • Guarantor • Mortgager
Banks • Lead managers • Underwriters • Paying agent • Transac]on administrator • Registrar • Security agent • Calcula]on agent
Monday 7 January 2013 17 Anwar Misbah Soubra
Monday 7 January 2013 18
Sukuk Holders Investors
SPV as
Issuer
Originator as Seller of Assets
SPV as Lessor/ Partner/ Investor
SPV as
Trustee
Originator as Lessee
Originator as Servicing Agent
Originator as Purchase Undertaking Obligor
Originator as Investment Agent
Originator as Manager Mudarib Third Party
Guarantor
SPV as Sale
Undertaker
Lead Arranger(s)/Manager(s)
Mortgager
Registrar Calcula5on Agent
Transac5on Administrator
Security Agent
Paying Agent
Underwriters
Third Party Second Obligor
Shari’a Board
Legal Advisor
Anwar Misbah Soubra
Iden]fy the Sukuk assets /Corporate Sukuk
• The originator iden]fies a pool of Shari’a compliant assets in
prepara]on of sale to generate cash flow and liquidity needed for business ac]vi]es.
• The originator may lease back the assets to be used in the business ac]vi]es (Lease Sukuk). (Actually in most cases of securi]za]on, the originator is in need of the securi]zed assets in the economic and business or produc]on ac]vi]es).
• or may act as a manager for the funds and invest them in the ac]vi]es as per a specified and described plan (Musharaka, Mudaraba Sukuk).
Monday 7 January 2013 19 Anwar Misbah Soubra
Financial Ins]tu]ons
• Balance Sheet structure of the Islamic Bank. • Bundle tangible assets (51%-‐70%) with debts such as Murabaha (Real estate, other assets) to form hybrid Sukuk.
• Liquidity management purposes.
Monday 7 January 2013 20 Anwar Misbah Soubra
Quasi Sovereign / Central Banks
• Sukuk as Liquidity management tool. • Subs]tute or supplement bonds with Sukuk. • Assets from public or governmental proper]es, or financial instruments.
Monday 7 January 2013 21 Anwar Misbah Soubra
Sovereign Sukuk
• Finance infra structure projects. • Government will not release property to Sukuk holders, by nature of public projects. (Airports, Schools, Water, Sewage & Drainage, …)
Monday 7 January 2013 22 Anwar Misbah Soubra
Success Factors
• Regulatory bodies. • Legal framework. • Bankruptcy regula]ons. • Ins]tu]onal environment. • Corporate governance. • Shari’a standards. • Accoun]ng standards. • Secondary markets. • Lis]ng criteria. • Disclosure of informa]on. • Con]nuous assessment or valua]on of Sukuk assets.
Monday 7 January 2013 23 Anwar Misbah Soubra
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