Hybrid sukuk structures and its importance for developing Islamic capital market

Abstract

Hybrid Sukuk structures and its importance for developing Islamic capital market

This study is about Sukuk which is an alternative for conventional bond and have a big demand in capital market all over the world. Study focus on basic structures of Sukuk, which are available in Islamic financial system and its process in particular, as well as examines how strong hybrid Sukuk structures are, its process and Shari’ah compliant contract which give a successful hybrid Sukuk structures and its recent development. This study help to those are interesting on in sukuk and willing to invest in sukuk, this will give full knowledge about basic sukuk structure and Hybrid Sukuk. This study utilized previous studies on this topic and AAOIFI (Accounting and Auditing for Islamic Financial Institutions) guideline and Dubai International Financial Center Sukuk Guidebook for adding more value to the study. It also explain each Shari’ah complaint contracts which are being used in Islamic finance and its related structures to understand more about the process and the cash flow of the Sukuk and Use current market statistics and market scholar’s opinion on Hybrid Sukuk to explain the importance of Hybrid Sukuk and its need for future market to compute with conventional bonds. Debt based Sukuk cannot trade in secondary market, but we need it, hybrid Sukuk help to make it as tradable via combine those contracts together with tradable contracts. Convertible and exchangeable hybrid Sukuks give an opportunity for investors to exchange their Sukuk to shares. So the market need more hybrid Sukuks for its active market and future development.