Sukuk
Sukuk, which are often called Islamic bonds, cover Islamic investment instruments that are registered in the name of the bondholders.
Sukuk are always linked to underlying assets through a variety of contract structures such as the Istisna'a, Ijara or Musharaka contracts. Holding a sakk (the singular of sukuk) represents ownership in the underlying.
Although similar in structure to asset backed securities, the issuer is obliged to pay the bondholder 100% of the redemption amount and a periodic distribution amount regardless of how the underlying performs.
As long as the above holds, sukuk are generally treated by the Global Debt Group as guaranteed Debt.
Issuers currently have two markets on which to have their sukuk admitted to trading:
- the London Stock Exchange (LSE) Regulated Market, which is an EU regulated market under MiFID; and
- the LSE Professional Securities Market (PSM), which is regulated by the LSE but is not an EU regulated market under MiFID.
Under the EU prospectus directive, the issuer must publish a prospectus in relation to the sukuk if these are being admitted to trading on an EU regulated market and/or if they are being offered to the public.
When a prospectus is not required under the prospectus directive and the issuer is seeking admission to the exchange regulated PSM, listing particulars with regards to the sukuk must prepared in line with the relevant listing rules and approved by the Global Debt Group
Where a prospectus or listing particulars is required, it must be prepared in line with the relevant prospectus and listing rules, and approved by the Global Debt Group.
To be eligible for admission to the Official List, issuers of sukuk must meet the requirements set out in LR 2 and LR 17.