Rock your resolutions. Take the Dummies challenge and you could WIN $1,000! Get Started.
Compare Commodity and Equity Funds on the Islamic Market
Who Are the Stakeholders of Islamic Financial Institutions?
Islamic Exchange-Traded Funds, Bonds, and the Islamic Derivative Market

Types of Sukuk in Islamic Finance

Step 6 of 6
Next Slideshow
Next Slideshow

Sukuk al istisna (Islamic project bond)

Istisna is a contract between a buyer and a manufacturer in which the manufacturer agrees to complete a construction project by a future date. The contract requires a fixed price and product specifications that both parties agree to. If the end product doesn’t meet contract specifications, the buyer can withdraw from the contract.

Istisna sukuk are based on this type of contract. The sukuk holders are the buyers of the project, and the obligator is the manufacturer. The obligator agrees to manufacture the project in the future and deliver it to the buyer, who (based on a separate ijara contract) will lease the asset to another party for regular payments.

The process of issuing istisna sukuk begins when the obligator (manufacturer or contractor) and the SPV sign an istisna contract.

  • Add a Comment
  • Print
  • Share
blog comments powered by Disqus
Why Takaful Is Needed in Islamic Finance
The Role of Corporate Governance in Islamic Financial Institutions
How Sukuk (Islamic Bonds) Differ from Conventional Bonds
Financing Construction Projects or Purchase Orders (Istisna) in Islamic Finance
The Islamic Principles behind Takaful
Advertisement

Inside Dummies.com