SUKUK AL-AMANAH LI AL-

ISTITHMAR
(SUKUK ALIm)

1000330 Siti Nurul Akma Zakaria

1000375 Chan Yoke Chin
1000360 Mardiana Abdul Aziz
1000374 Whalan Kazombiaze

IE1002 : REPORTING OF ISLAMIC FINANCIAL

TRANSACTION
 OUTLINE

Introduction to Sukuk

Background of Sukuk ALIm

Structure of Sukuk ALIm

Unique Features of Sukuk ALIm

Key considerations
 NEWS RELEASE

Source: http://biz.thestar.com.my/news/story.asp?file=/2010/8/19/business/6881649&sec=business
1 INTRODUCTION ON SUKUK

N1 - AAOFI defines sukuk as – “Certificates of equal value representing after closing subscription, receipt
of value of the certificates and putting it to use as planned , common title to shares and rights in tangible
assets, usufructs and services, or equity of a given project or equity of a special investment entity”

N2 – General view of scholars is that the securitisation and secondary trading are generally acceptable if
the asset portfolio represented by the sukuk is a combination of debt receivables & other tangible assets
subject to an approved ratio.
2 BACKGROUND OF SUKUK ALIm

Al-Amanah
 Means trust
 Example : Asset Trustee, Asset Certificate, Sukuk Trustee,
Sukuk Trust

Li al- Istithmar

 Means for the purpose of investment
 Example: Property Investment
2 BACKGROUND OF SUKUK ALIm
 Launched on 13.7.2010 by Cagamas Berhad (“Cagamas”). 1 st issue
on 19.8.2010
 Jointly structured by Cagamas & Al-Rajhi Banking & Investment
Corp (Msia) Bhd (“Al-Rajhi”)
 Comprised of Islamic Commercial Paper Programme & Islamic
Medium Term Note Programme for a combined aggregate limit of
RM5.0 billion in nominal value
 Rated AAA by both RAM & MARC (reflects Cagamas’ corporate
credit rating)
 Raised for Cagamas’ general working capital & corporate purposes
that are Shariah compliant
 Hailed “landmark structure with groundbreaking features”
 Subscription rate – 2.7x , with 33% take up rate from Middle East
based investors
2 STRUCTURE OF SUKUK ALIm
PART 1 – PROPERTY INVESTMENT

Source: RAM’s Landmark Deal Report August 2010

2 STRUCTURE OF SUKUK ALIm
PART 2 – COMMODITY TRADING

Source: RAM’s Landmark Deal Report August 2010

2 STRUCTURE OF SUKUK ALIm
PART 3 – MATURITY

Source: Cagamas
3 UNIQUE FEATURES

According to RAM Ratings Landmark Deal Report of

August 2010, Sukuk ALIm unique features are the
exclusion of the following contentious shariah issues

 Bay Al Inah (Sale on deferred payment and subsequent

buy-back at lower cash price)
 Bay Al Dayn (Trading of debt)

 Wa’d (Purchase undertaking)

3 UNIQUE FEATURES:
ABSENCE OF BAY AL INAH

Commodity trading involves sale transactions among

4 or more parties

Cagamas press release statement also mentioned the

absence of Tawarruq Munazzam (organized
tawarruq)
3 UNIQUE FEATURES:
ABSENCE OF BAY AL DAYN

 Portfolio of assets involves the co-mingling of 2 different asset

classes
 Tangible assets
 Financial assets

 Real estate properties will make up more than 50% of the

initial value of assets represented. This addresses issue of
sukuk tradability in the secondary market.

 AAOIFI standards states that secondary trading are generally

acceptable if the asset portfolio represented by the sukuk is a
combination of debt receivables & other tangible assets where
the tangible assets exceed 33% of the total value of assets
portfolio
3 UNIQUE FEATURES: ABSENCE OF WA’D

 Generally all sukuk issued today guarantee the return of

principal to the sukuk holders at maturity, in exactly the same
way as conventional bonds.

 This is accomplished by means of a binding promise from

either the issuer or the manager to repurchase the assets
represented by the Sukuk at the stated price at which these
were originally purchased by the Sukuk holders at the
beginning of the process (ie the face value), regardless of their
true or market value at maturity.

 Serves as a guarantee on capital and profit, and thus

contravene risk-reward sharing principle.
3 UNIQUE FEATURES: ABSENCE OF WA’D

In Sukuk Al Amanah Al Isthimar:

 No undertaking to purchase the underlying assets upon

maturity

 Instead there will be a private auction among genuinely

interested parties as part of the redemption process

 Successful bidder will be chosen based on the highest bid,

subject to a reserved price (nominal value and final profit due)

 Highest bid is more than reserved price, excess will be

distributed to the Asset Agent as incentive fees.
4 KEY CONSIDERATIONS

 What are the recourses available to the Sukuk Holders in case of late
payments? Is there a remedy for late payments?

 Reserve price – is risk reward sharing eliminated?

 Is there a conflict of interest whereby Cagamas acting two roles

(Agent and bidder) in the auction?

 Is there any element of “Tanajjuz” in the auction process and is it

mitigated?
THANK YOU