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The most common uses of sukuk
can be named as project specific, asset-specific, and balance sheet
specific.
i. Project-specific Sukuk
Under this category money is raised through sukuk for specific project. For
example, Qatar Global sukuk issued by the Government of Qatar in 2003 to
mobilize resources for the construction of Hamad Medical City (HMC) in Doha.
In this case a joint venture special purpose vehicle (SPV), the Qatar Global
sukuk QSC, was incorporated in Qatar with limited liability. This SPV
acquired the ownership of land parcel, that was registered in the name of
HMC. The land parcel was placed in trust and Ijara-based Trust Certificates
(TCs) were issued worth US$700 million due by October 2010. The annual
floating rate of return was agreed at LIBOR plus 0.45 per cent.
ii. Assets-specific Sukuk
Under this arrangement, the resources are mobilise by selling the
beneficiary right of the assets to the investors. For example, the
Government of Malaysia raised US$ 600 million through Ijara sukuk Trust
Certificates (TCs) in 2002. Under this arrangement, the beneficiary right of
the land parcels has been sold by the government of Malaysia to an SPV,
which was then re-sold to investors for five years. The SPV kept the
beneficiary rights of the properties in trust and issued floating rate sukuk
to investors. Another example of Asset-specific sukuk is US$250 million
five-year Ijara sukuk issued to fund the extension of the airport in
Bahrain. In this case the underlying asset was the airport land sold to an
SPV.
iii. Balance Sheet-specific Sukuk
An example of the balance sheet specific use of sukuk funds is the Islamic
Development Bank (IDB) sukuk issued in August 2003. The IDB mobilised these
funds to finance various projects of the member countries. The IDB made its
debut resource mobilization from the international capital market by issuing
US$ 400 million five-year sukuk due for maturity in 2008.
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