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.
This reduces the popularity of sukuk al-murabaha for potential investors and is reflected by the limited number of sukuk al-murabaha issuances in the sukuk market. An example of a sukuk al-murabaha issuance is: Arcapita Bank, US$200million issued in October 2005.
Prior to the AAOIFI statement in 2008 (the “AAOIFI Statement”), one of the more commonly used sukuk structures was that of sukuk al-musharaka. However, following on from the AAOIFI Statement criticising the use of purchase undertakings in sukuk al-musharaka structures (as further discussed below under the heading “AAOIFI’s Statement of 2008”), the popularity of this structure has declined in recent times.
Sukuk al-ijara (lease-based sukuk) The ijara contract is essentially a rental or lease contract: It establishes the right to use an asset for a fee. The basic idea of ijara sukuk is that the sukuk holders (investors) are the owners of the asset and are entitled to receive a return when that asset is leased.
Sukuk al-salam (deferred delivery purchase sukuk) In a salam contract, an asset is delivered to a buyer on a future date in exchange for full advance spot payment to the seller. Sharia allows only salam and istisna contracts to be used to support advanced payment for a good to be delivered in the future.