Islamic Banking & Finance Assignment

Chartered Banker MBA Programme
ASB9039 Islamic Banking & Finance

TABLE OF CONTENTS
Introduction................................................................................................................................3
Analysis of the reasons for the funding difficulties faced by Lend Lease.................................3
Sukuk as financial source for funding of Olympic Village....................................................3
Funding from sources except conventional finance and importance of Olympic label in
collection of funding..............................................................................................................4
Suitable Sukuk during construction and post-construction phase..........................................6
Pricing strategies for Sukuk...................................................................................................8
Trading of Sukuk in secondary market..................................................................................9
Mechanics of the process.....................................................................................................11
Sukuk issuance and its impact on other Islamic finance products.......................................13
Conclusion................................................................................................................................17
References................................................................................................................................18

LIST OF FIGURES
Figure 1: Comparison of conventional and Islamic securitized securities...............................18

INTRODUCTION
Sukuk is a novel concept in the field of finance which is in due compliance with shariah
principles. Sukuk are indeed attractive instruments for the Islamic Financial Institutions and
manage those funds that cannot be otherwise invested in conventional securities. Sukuk was
developed as a significant mechanism for raising funds in the international capital market by
an acceptable structure (Godlewski, Turk-Ariss and Weill, 2013). The current report
emphasizes on an a deeper understanding of the concept Sukuk and its relevance in
international events like Olympic village. Further, different types of Sukuk are analysed to
identify the suitable Sukuk during construction and post-construction phase. Moreover, then
its pricing strategy and applicability in the secondary market are evaluated. Lastly, the Sukuk
maturity in the event of housing units is assessed and a report is presented to have a deeper
outlook over the whole concept. It is a kind of security which provides bank and companies
to decrease the increase in the volume of transactions based on Murabahah contract through
this instrument.
ANALYSIS OF THE REASONS FOR THE FUNDING
DIFFICULTIES FACED BY LEND LEASE
Sukuk as financial source for funding of Olympic Village
Similar to the authentic and conventional bond in Western finance, Sukuk is a form of
Islamic finance certificate, which is in compliance with the religious laws of Sharia-Islamic.
It was first issued by Malaysia and Bahrain soon followed its suit in 2001. The instrument has
support of physical assets and balance sheet, thus Sukuk bonds can be applied for financing
method for government agencies and even for private institutions. Since the traditional
westernised bonds are interest bearers bond structures and Islamic laws abhor loans that
borne charge or interest (El Qorchi, 2005). Due to its non-permissibility in Islamic, the
introduction of Sukuk was made wherein Sukuk sells off the investor with a group of
certificate and further uses the proceeds to purchase an asset in which the group of investor
holds their partial ownership. Herein, the issuer is also liable to make a contractual promise
to buy back their bonds at par value in future stance.