Samples of Sukuk Issued

This chapter provides some real-world examples of already issued sukuk securities from different countries. Sukuk first came to the public exchange market in 1990, when Shell MDS offered an Islamic debt instrument and listed it for trading. Before this date, sukuk debt instruments were offered in over-the-counter markets and, in later years, in exchanges in countries other than Malaysia, which in 2014 accounts for four-fifths of the value of listing (see Table 5.1).


The Malaysian Ministry of Finance, on behalf of the government of Malaysia, is frequently issuing Shari'ah-based sukuk securities to public investors. One of the very well branded sukuk offers is the sukuk simpanan rakyat (SSR), which is offered to local investors. In 2009, a total amount of MYR5 billion (US$1.63 billion) was raised through the SSR instrument in two issues. The first, known as SSR2009/01, was issued on May 14, 2009. This offer was worth MYR2.5 billion with a maturity of three years. The government of Malaysia appointed the Bank Negara Malaysia, the country's central bank, to conduct the issuance process.

The SSR, with an average annual profit rate of 5 percent (paid quarterly) is offered to Malaysian citizens who are at least 21 years old. Returns on the issue are tax-exempt. In order to widen the spectrum of individual investors, the issuer has decided to impose a maximum investment limit of MYR50,000 per investor in addition to the usual minimum amount of MYR1,000. The SSR is nonnegotiable, nontransferable, and nonassignable.

TABLE 5.1 List of Notable Sukuk Issuances in Malaysia

List of Notable Sukuk Issuances in Malaysia



Central Bank of Bahrain (CBB) uses salam sukuk securities as an instrument for short-term financing. CBB salam securities have a maturity of 91 days. Salam securities are very well accepted by investors and are mostly oversubscribed. CBB has used this method since 2001 and raised a total of BHD1.3 billion (US$3.87 billion) in 2003-2012. CBB planned to issue 12 tranches of salam sukuk, each worth BHD18 million (US$6.75 million), in 2013.

CBB salam sukuk uses aluminum as the underlying asset for the contract. The underlying asset is sold to the buyer (the government of Bahrain) at the end of the contract. Therefore, the contract is between the sukuk holders and CBB, and the sukuk proceeds are used as advance payment for the purchase of the underlying asset (aluminum). At the maturity of the contract, CBB sells the asset to the government and distributes the proceeds to the sukuk holders as the maturity payment. Salam sukuk securities are mostly purchased by local investment houses and banks as a mean of short-term liquidity management.


Khazanah Nasional Berhad (KNB), the sovereign wealth fund of Malaysia, is one of the innovative powerhouses in sukuk issuance. KNB has issued various types of sukuk securities, especially customized to the financing needs of its expansion policies. Some of the notable issues by KNB are listed in Table 5.1.

One of the well-cited issues is KNB's exchangeable (convertible) sukuk, which was the first one in the world. It was issued in October 2006 for US$750 million. This five-year-maturity sukuk had an option for sukuk holders to convert their sukuk certificates to ordinary shares of Telekom Malaysia (TM), Malaysia's telecommunication company, at a fixed exchangeable price of MYR1.00 per share. This sukuk was the first contract that used equity shares of a publicly listed company as the underlying asset, and hence it was tradable in the main secondary market.

One of the key features of this issue was that the periodic sukuk coupon payments were not guaranteed and were based on the dividend income generated from the underlying assets (TM shares). However, in order to reduce the cash-flow uncertainties of the periodic payments, a sinking fund was embedded in the structure of the sukuk. This sukuk was strongly favored by investors to the extent that it had recorded an oversubscription ratio of 6.6, that is 6.6 applications for each lot of shares.

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