Sukuk is a
financial certificate or an Islamic bond. It is not a fixed income, and not
interest-bearing bonds Sukuk are securities that suits with Shariah compliant
which prohibited riba. Sukuk are frequently portrayed as one of the most
promising instruments in Islamic finance. There are two categories of Sukuk
which are Debt Sukuk and Equity Sukuk.
differences between a Debt Sukuk and an Equity Sukuk are as follows:
financing concept applied
Bai’ Bithaman Ajil, Al-Istisna, Al-Ijarah, Al-Salam, Al-Tawarruq, Al-Inah
between issuer and sukuk holder
Issuer owes a
debt of Rental Notes to the sukuk holder (financier) after the transaction.
by sukuk holder in business of issuer. Not a debt owed by issuer.
is part of the issuer’s business.
received by sukuk holder
fixed sum of money periodically from Issuer.
payment from issuer. Sukuk holder gain a profit return on a company
ownership with no right to dispose of underlying assets.
and sukuk holder have a right and obligation on the underlying asset or
investment at a pre-agreed profit and loss sharing ratio during the contract
initiated. If Mudharabah concept is apply, the sukuk holder are the capital
provider and the issuer is the entrepreneur. If Musyarakah concept is apply,
then the sukuk holder and issuer are partner in the particular business.
Sukuk is simple and involve low cost.
Issue Sukuk Equity
is more complex and need to use third party services such as lawyers and
accountants. It is an equity investment. Therefore, the cost is higher.
of money release
released is not investment in business of issuer. It is payment for Purchase
released is an investment by sukuk holder in business of issuer.
not distribute profits of business to financier
covenants to pay profits to financier based on agreed profit sharing ratio.
which sukuk is based on should be shari’ah compliant.
compliant might be applied on the issuer’s business.
any risk need to bear due to the sukuk holder will receive a fixed sum of
money periodically from issuer. This sukuk also fits easily with trading
system and regulation; and easy to price in secondary trading.
There is a
risk must bear by sukuk holder when will not receive the expected return in the
case the underlying asset do not perform.
sukuk holder also will bear the risk of depreciation of the underlying asset.
This may affect their principal amount when they sell the share back to the originator