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Aluminum has been designated
as the underlying asset of the Bahrain Government al Salam contract, where
by it promises to sell aluminum to the buyer at a specified future date in
return of a full price payment in advance. The Bahrain Islamic Bank (BIB)
has been nominated to represent the other banks wishing to participate in
the Al Salam contract.
BIB has been delegated to
sign the contracts and all other necessary documents on behalf of the other
banks in the syndicate. At the same time, the buyer appoints the Government
of Bahrain as an agent to market the appropriate quantity at the time of
delivery through its channels of distribution. The Government of Bahrain
provides an additional undertaking to the representative (BIB) to market the
aluminum at a price, which will provide a return to al Salam security
holders equivalent to those available through other conventional short-term
money market instruments.
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