Preview

Markets and Financial Institutions (Sukuk)

Good Essays
Open Document
Open Document
1119 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Markets and Financial Institutions (Sukuk)
1. Introduction

RAM Ratings’ defines that sukuk default as not specific to any particular financial obligation but also the historical behaviour of the issuer’s corporate credit rating and is independent of the number and size of rated debt papers issued. They defined an event of default to include the following, a missed interest and/or principal payment, which is not remedied within the grace period; the legal insolvency or bankruptcy of the issuer; failure to honour the corporate-guarantee obligations provided to subsidiaries; and a distressed exchange in which the bondholders are offered a substitute instrument with inferior terms (e.g. extended maturities, lower coupons or diminished security packages).

Under the Malaysian jurisdiction, debt receivables are considered a permissible asset class for securitisation according to the Shariah Advisory Council (SAC) of Securities Commission (SC) Malaysia. This means jurisdictions adopting the AAOIFI standards will inevitably be utilising different sukuk structures and thus different methods of raising investor’s funds, than jurisdictions which rely on local law, as will be seen in the relevant sections.

There are two role security commision in sukuk which is take the initiative and the development of Islamic capital market conduct research and study and make policy recommendations related to product and capital market activities. Second is review of conventional products and listed securities for compliance with Shariah principles and operate an introduction to the products of the new Islamic.

For Straight A’s Portfolio Sdn. Bhd., the type of the sukuk that was issue is Murabahah Underwritten Notes Issuance Facility (MUNIF). The MUNIF is an Islamic debt programme pursuant to which the issuer may issue Murabahah Underwritten Notes (‘MUNIF Notes’). The MUNIF Notes is a short-term note. The MUNIF is based on the Syariah principles of Murabahah which is a contract that refers to the sale and purchase

You May Also Find These Documents Helpful

  • Best Essays

    The research is to investigate the alternative financing in Malaysian Higher Education by introducing student loan securities as a type of asset-backed securitization. It will analyse and consider possible effects in order to relieve the pressure currently imposed on the Government Budget. The aim of this research is to identify the outstanding systems financed by capital market and banking systems in the United States and Chile and suggest how a similar system can be adopted to improve the National Higher Education Fund Corporation (PTPTN) as main corporation providing loans for student in Malaysia. The work considers the characteristics of the National Higher Education Fund Corporation (PTPTN), suggests a structure for student loans securitization, and study the potential of the Asset-backed Securitization process in resolving the student loans problem. The expectation is that the securitization process and the new financial instrument will benefit both the students and the government.…

    • 2308 Words
    • 10 Pages
    Best Essays
  • Best Essays

    This case describes and analyzes how securitization and structured products work and the value they add to finance, and how structured products are constructed, their value and how they are used in finance.…

    • 2523 Words
    • 11 Pages
    Best Essays
  • Satisfactory Essays

    Q 8. Some guidelines on shares & debentures issued by the government that are very…

    • 633 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Additionally, the financial purposes of conventional bonds and Sukuk differ from each other. Conventional bonds are issued to finance almost any business prospects, but only if the business is under a legal framework. Conversely, the activity that Sukuk issuers involve complies with all of the Islamic laws, it has to be acceptable in the nature and use in the business (Bursa Malaysia). For instance, alcohol businesses violate Islamic…

    • 495 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    Total $5,632.83 $4,613.18 $1,019.65 Alternatively: cumulative interest paid over a period of time is the total payment subtracting the principal paid. The total payments = 469.4024 x 12 = $5,632.83. The ending balance after 12 payments can be found with a financial calculator:…

    • 1966 Words
    • 8 Pages
    Satisfactory Essays
  • Good Essays

    Bod Market

    • 8641 Words
    • 35 Pages

    Jiang, Guorong, Nancy Tang, and Eve Law (2002). The Costs and Benefits of Developing Debt Markets. The Hong Kong’s experience. BIS papers No. 11. Basel: BIS. Königson, Lennart and Malin Nystrand (2000). “Sri Lanka Survey: Issue in the Local Bond Market Development. In Allison Harwood (eds.) Building Local Bond Markets: An Asian Perspective. Washington, D.C.: IFC. Kvibäck, Makael (2000a). “Bangladesh Survey: Issues in Local Bond Market Development. In Allison Harwood (eds.) Building Local Bond Markets: An Asian Perspective. Washington, D.C.: IFC. Kvibäck, Makael (2000b). “Nepal Survey: Issues in Local Bond Market Development. In Allison Harwood (eds.) Building Local Bond Markets: An Asian Perspective. Washington, D.C.: IFC. Leonardo, John (2000a). “India Survey: Issues in Local Bond Market Development. In Allison Harwood (eds.) Building Local Bond Markets: An Asian Perspective. Washington, D.C.: IFC. Leonardo, John (2000b). “Pakistan Survey: Issues in Local Bond Market Development. In Allison Harwood (eds.) Building Local Bond Markets: An Asian Perspective. Washington, D.C.: IFC. Mihaljek, Dubravko, Michela Scatigna, and Agustin Villar (2002). Recent Trends in Bond Markets. BIS papers No. 11. Basel: BIS. Mohanty, M. S. (2002). Improving Liquidity in Government Bond Markets: What Can be Done? BIS papers No. 11. Basel: BIS. Reddy, Y. V. (2002). Issues and Challenges in the Development of the Debt Market in India. BIS papers No. 11. Basel: BIS. Shaha, Ajay and Susan Thomas (2001). “The Evolution of the Securities Markets in India in the 1990s.” Turner, Philip (2002). Bond Markets in Emerging Economies: An Overview of Policy Issues. BIS papers No. 11. Basel: BIS. Thorat, Usah (2000). “India’s Debt Market: A Review of Reforms. In Allison Harwood (eds.) Building Local Bond Markets: An Asian Perspective. Washington: D.C.: IFC. Valle, Clemente del (2001). Developing Government Bond Markets: A Handbook. Washington, D.C.: World Bank.…

    • 8641 Words
    • 35 Pages
    Good Essays
  • Satisfactory Essays

    Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called…

    • 2207 Words
    • 9 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Sarfaesi act

    • 256 Words
    • 2 Pages

    1.To issue demand notices to the defaulting borrower and guarantor,calling upon them to discharge their dues in full within 60 days from the date of notice.…

    • 256 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Islamic Unit Trust

    • 419 Words
    • 2 Pages

    Securities Commission adopts 2 tier regulation for Islamic unit trusts 1st tier – regulation that applies to all unit trusts 2nd i. ii. iii. tier – additional regulation required for Islamic unit trusts Appointment of Shariah Committee / Advisory Board / Adviser Appointment of 2 Muslim Investment Committee Member Appointment of a designated compliance officer for Islamic unit trusts iv. Enhanced disclosures in offering documents v. Reports by Shariah Committee / Advisory Board / Adviser in annual and interim reports to unitholders.…

    • 419 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    SUKUK

    • 2908 Words
    • 10 Pages

    For literal meaning, Sukuk is mean sak which is cheque in singular and certificate in plural. According to Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Sukuk is defined as a certificate of equal value representing undivided share in the ownership of tangible assets, usufructs or services or assets of a particular project or any specified investment activity. On the other hand, Securities Commission Malaysia (SC) defines Sukuk as trust certificates of participation securities that grants investors a share of the asset along with the cash flow and risks that commensurate from such ownership. Based on the two definitions that given by AAOIFI and SC Malaysia, we can assure that Sukuk is not an Islamic debt security but more accurately as an Investment Certificate as it represents an ownership in specified assets and give returns based in the cash flow originating from the assets. It is an asset-backed ownership because return on Sukuk is fixed as it is based on a fixed cash flow such as rent. This also gives Sukuk another name as a fixed income security. So, Islamic Securitisation has been redefined as a process in which ownership of the underlying assets is transferred to a larger number of investors through papers known as Sukuk.…

    • 2908 Words
    • 10 Pages
    Powerful Essays
  • Satisfactory Essays

    Sukuk Analysis

    • 757 Words
    • 4 Pages

    Corporate were the initial pioneers of Sukuk in the early 2000's. However, by 2008 the Indonesian government had taken the initiative to act out some laws to facilitate Shari'ah financing. This has resulted in Indonesian government taking the lead in issuing Sukuk on a regular basis, laying the framework for the issuance by corporates. Domestic Sukuk is a valuable tool for the Central Bank (BOI) policy in having Sukuk Negara as part of its monetary operation. Retail Sukuk provides for wider understanding and acceptance of Sharia compliant investments as well as encouraging savings. It is no surprise that the Banks and Insurance companies are taking up the majority of the Sukuk, as GOI offers “risk-free” return as well as duration investment to match their Asset and Liability. Also, encouraging to note that 18 percent of the market share of tradeable Sukuk are from individuals Retail…

    • 757 Words
    • 4 Pages
    Satisfactory Essays
  • Powerful Essays

    Financial Markets

    • 1904 Words
    • 8 Pages

    The function of this business report is to analyse the data given and give suggested approaches to further improve the business. It includes the analysis of the given data and the recommendations that will aid with the business success. Information from the spreadsheet was analysed and solutions to problems were given. Key findings such as the revenue and profits were reviewed. Mistakes were also made on the spreadsheets given that have already been remedied. In conclusion, this business report analyses all the data given and there was an attempt to solve the problems identified.…

    • 1904 Words
    • 8 Pages
    Powerful Essays
  • Satisfactory Essays

    The financial and economic crisis has highlighted the central role of a sound and well-functioning financial sector for economic activities. An efficient financial sector allocates the resources saved by a nation’s citizens, as well as those entering the economy from abroad, to their most productive uses. It channels resources to those entrepreneurial or investment projects with the highest expected rates of return rather than to the politically connected. A thorough and proper assessment of risk is therefore a key ingredient of a…

    • 594 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Both the financier and the client share the profit and loss of the business together. Thus, the argument that said Musharakah Mutanaqisah is similar to interest based loan is not found. Furthermore, the International Fiqh Academy of OIC in its 15th session made resolution that Musharakah Mutanaqisah is a valid contract in the Shariah. Additionally, the Shariah Advisory Council of Bank Negara Malaysia in its 56th issued a fatwa that Islamic financing product structured based on Musharakah Mutanaqisah contract is permissible in light ofhe fact that Musharakah Mutanaqisah is a recognized contract in Islamic muamalat. Accordingly, we could draw coclusion that Musharakah Mutanaqisah is a permitted contract in Islamic Shariah. Notwithstanding, scholars has proposed a few principles and guidelines that are needed to be observed strictly, so that this contract does not surpass the limit of the Shariah and does not get assimilated with the interest based…

    • 774 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Financial Managment

    • 2169 Words
    • 9 Pages

    8. Some guidelines on shares & debentures issued by the government that are very important for the…

    • 2169 Words
    • 9 Pages
    Powerful Essays