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The International Islamic Financial Markets Conference

May 16th, 2005


Kingdom of Bahrain

Sokouk Al
-Intifaa
Al-Intifaa
Islamic Money Market
Instrument
By:
-Homoud
By: Fuad
Fuad Hamed
Hamed Al
Al-Homoud
Munshaat
Munshaat Real
Real Estate
Estate Projects
Projects Company
Company
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Table of Contents
1.
2.
3.
4.

5.

6.

7.
8.

Presentation Approach
Introduction - What is Sokouk
Sokouk Vs. Bond
Types of Sokouk
a. Non Tradable Sokouk
b. Tradable Sokouk
Sokouk Al-Ijara
a. Definition
b. Characteristics
c. Types of Sokouk Al-Ijara
Sokouk Al-Intifaa
a. Definition
b. Features
c. Economic Value
d. Sokouk Al-Intifaa as a Tradable Instrument
Application
Conclusion

Presentation Approach

Sokouk

Sokouk
Al
-Ijara
Al-Ijara

Sokouk
Al
-Intifaa
Al-Intifaa

Tradable
Instrument

Application
3

Introduction

Conventional
Financial Market
Single
Debt
Based
Single
DebtCategory
Category
Based
Instrument
Multiple
Instrument
Multiple
Structures
Structures

BOND
BOND

Islamic
Financial Market

Sokouk
Sokouk

Asset
Asset Based
Based
Focus
Multi
Diversified
-Billon
of
Focus
Multi-Billon
Diversified
of the
the
Instrument
Instrument
Global
Dollars
categories
financial
Market
Global
Dollars
categories
financial
Market
(Asset
Right
of
(Asset
Right
of
Market
Market
Use)
Use)
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Sokouk
The Islamic Bond
Investment Certificates representing a pro-rata share in
a Portfolio of Investment.
The Performance of Sokouk is a reflection of the
performance of the portfolio.
Issuance of Sokouk represents a purchase of a share in an
income producing investment.
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Sokouk Vs Bond
Ownership instrument Vs Debt instrument
Investment instrument Vs Financial
Financinginstrument
instrument
Profit & Loss instrument
No Money Back Guarantee
Duration is not necessarily Limited
Ownership Consequences
Business Activities in compliance with Islamic Shariaa

Types of Sokouk
Sokouk
Sokouk

Non
Non
Tradable
Tradable

Debt Portfolio

Tradable
Tradable

- Asset Based
- Semi Asset Based
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Types of Sokouk
Sokouk
Sokouk

Non
Non
Tradable
Tradable

Morabaha

Tradable
Tradable

Salam
Istisna

Musharaka
Mudaraba

Ijara
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Sokouk Al-Ijara
Definition

A Financial Instrument structured to represent a Pro


-rata share in
Pro-rata
a pool of cash flow generating assets
assets.. Such share ( Sokouk ) can be
transferred to investors by means of ownership either with or
without the support of further collaterals
collaterals..
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Sokouk Al-Ijara
Characteristics

Securitization of Leases
Effective Fund Raising
Secondary Market Tool
Tradable
Short Term Liquidity Instrument
Effective Asset / Liability Management Tool
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Types of Sokouk Al-Ijara


Sokouk
Sokouk
Al
-Ijara
Al-Ijara
Asset
Asset
Backed
Backed

Lease
Lease Hold
Hold

Ownership Entitlement

Usufruct Entitlement
Sokouk Al
-Intifaa
Al-Intifaa
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Sokouk Al-Intifaa

A Derivative of Lease / Forward Lease


B.O.T. Entitlement
Disintegration of Real Estate Elements ( Commoditization )
Hotel / Hospitality Industry
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Sokouk Al-Intifaa
Definition

Sokouk Al-Intifaa is a Certificate or Deed that entitles its holder


the right to utilize a specific real estate property for a specific
duration of time per year over a determined number of years. This
right is wholly owned by the Sokouk holder who is entitled to either
sell, grant, inherit or invest the Sokouk.
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Sokouk Al-Intifaa
Features

Representation of Strategic Projects / Assets


Representation of B.O.T. Projects
Long Term Leasehold Instrument
Mobilization of Funds / Assets
Effective Money Market Instrument
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Sokouk Al-Intifaa
Economical Value

(Hospitality Industry in Makkah)


Sokouk
Sokouk
Sokouk
Sokouk
Sokouk
Sokouk

Sokouk
Sokouk
Sokouk
Sokouk
Sokouk
Sokouk

Sokouk
Sokouk
Sokouk
Sokouk
Sokouk
Sokouk

Sokouk
Sokouk
Sokouk
Sokouk
Sokouk
Sokouk

Sokouk
Economical
Value

Value
Value
Improvement
Improvement
Factors
Factors

Market
Market
Inflation
Inflation

Increase
Increase in
in
Rooms
Rooms Rate
Rate

Increasing
Increasing
Rooms
Rooms Demand
Demand

Shortage
Shortage in
in
Rooms
Rooms Supply
Supply

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Sokouk Al-Intifaa
A Tradable Instrument

Sokouk
-Intifaa
Sokouk Al
Al-Intifaa
is
is aa Tradable
Tradable
Instrument
Instrument

Transferable
Transferable

Value
Value

Sokouk
Sokouk
Al
-Intifaa
Al-Intifaa

Transfer
Transfer to
to new
new Investors
Investors

Produces
Produces aa set
set of
of Cash
Cash Flow
Flow

Sokouk
-Rata Share
Sokouk As
As Pro
Pro-Rata
Share of
of Usufruct
Usufruct
Disintegration
Disintegration of
of Leased
Leased Assets
Assets

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Application
Sokouk
Sokouk
Sokouk
Sokouk
Sokouk
Sokouk

SPC

Sublease

Issuance of Sokouk

Market
Maker

Purchase of
Lease Rights

Advance
Rental

Zamzam
Zamzam
Tower
Tower

Sublease

Liquidity
Receiver

Ad
va
Re nce 2
nta
l

5
6

Liquidity
Provider

ed
r
r
fe
De ntal
Re

Sublease 3

Sublease
17

17 flow
Cash

Application
Sokouk
Sokouk
Sokouk
Sokouk
Sokouk
Sokouk

SPC

Sublease

Issuance of Sokouk

Market
Maker

Purchase of
Lease Rights
1
- Income
1Income from
from Sokouk
Sokouk Operation
Operation
2
- Income
2Income from
from Treasury
Treasury Transaction
Transaction

Zamzam
Zamzam
Tower
Tower

Advance
Rental

Sublease

Company Income Profile

Liquidity
Receiver

Ad
va
Re nce 2
nta
l

5
6

Liquidity
Provider

ed
r
r
fe
De ntal
Re

Sublease 3

Sublease
18

18 flow
Cash

Conclusion

React to market trend.


Take initiative.
Expand product range.
Build regional infrastructure.
Capitalize on available resources.
Establish centralized satellite center.
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Thank You
Sokouk Al
-Intifaa
Al-Intifaa
Islamic Money Market
Instrument

2005
2005

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