case studies in sukuk ijarah structure
TRANSCRIPT
CASES STUDIES IN SUKUK IJARAH STRUCTUREGROUP 2
ZUHAIRA NADIAH AIMI NADIRAH NURUN NADIA
MALAYSIA TNB NE SUKUK
INTRODUCTION
•TNB Malaysia has won tender launched by Energy Commission of Malaysia to design, supply, construction, commissioning, operation and maintenance of a 1,071.43MW combined cycle gas-fired power plant to maintain the reserved margin above 20% for Peninsular Malaysia. Project site located in Prai,Butterworth,Penang, •TNB awarded the project to TNB Prai and TNB Prai created a SPV to undertake the project and acted as the Issuer of the Sukuk which is the TNB NE.•TNB Prai as the project company was awarded a concession for the design, construction, ownership, operation and maintenance of CCGT power plant in Prai, Penang, under a 21-year PPA. The generated electrical power will then be purchased by the TNB, pursuant to a PPA.
SUKUK DETAILS
SUKUK STRUCTURE
ANALYSIS OF ISSUES
ISSUES EXPLANATION
Sukuk Default •There will be less possibility for sukuk default as this Sukuk been aided by TNB as the Sponsor/rolling guarantee to TNB NE (Issuer)
•Ultimately, as TNB is indirectly owned by the government, this alone serves the basis for the market confidence in all its corporate issuances.
QATARQATAR GLOBAL
SUKUK 2003
INTRODUCTION
•The Government of Qatar through the Qatar Global Sukuk (QGS) has issued a rated trust certificates (Sukuk) which ultimately been used for the general funding purposes to raise Shariah compliant funds.
•The purpose of this Sukuk is to mobilise resources for the construction of Hamad Medical City (HMC) in Doha.
•This Sukuk has been listed in Luxembourg Stock Exchange and the Labuan International Finance Exchange.
SUKUK DETAILS
QATAR(LESSEE)
QATAR(SELLER)
SPV
INVESTORS/
SUKUK HOLDERS
SUKUK STRUCTURE
Certificateproceed
Certificateproceed
Title to Land Parcel
Periodic and dissolution distributions amount
Lease rental and exercise price on a dissolution event
SPV leases the land parcel to Qatar for 7 years terms and sells on dissolution event
ISSUES
DUBAINAKHEEL
SUKUK 2006
INTRODUCTION
•Nakheel Sukuk was issued in Dubai and is the largest sukuk offering ever executed in the world, USD $ 3.52 billion.
•Sukuk issuance took place on 14th December 2006 by Nakheel Development Limited, its SPV arranged by Dubai Islamic Bank.
•The purpose is to build a city twice the size of Hong Kong Island, with skyscrapers for 1.5 million residents, all ringed by a 75 km canal at Dubai Waterfront.
No. Subject Details
1. Type of Sukuk Ijarah2. Purpose Property development at Dubai
Waterfront3. Assets DWF South & Crescent Lands4. Obligor Nakheel Holdings (1, 2, 3)5. Issuer/SPV Nakheel Development Limited6. Lead Manager Dubai Islamic Bank/Barclays Capital7. Issue size USD $ 3.52 Billion8. Issue date 14th December 20069. Maturity date 14th December 200910. Tenor 3 Years
SUKUK DETAILS
No. Subject Details
11. Governing Law English Law & UAE Law
12. Guarantor Dubai World
13. Documentations a. Purchase Agreement b. Lease Agreementc. Servicing Agency Agreementd. Sale undertakinge. Purchase undertakingf. Agency declarationg. Declaration of Trusth. Security Agency Agreement
SUKUK HOLDERS
NAKHEEL DEVP. LIMITED (ISSUER)
NAKHEEL HOLDINGS 1
NAKHEEL CO. PJSC
NAKHEEL HOLDINGS 2
1. Certificates Sukuk Proceeds
2. Sukuk Assets Purchase Price
3. Funds
4. 3-yr lease of Sukuk Assets
SUKUK STRUCTURE
5. Lease payments
6. Profits distribution
ISSUESIssue ExplanationCredit Crisis • Even though there is a guarantee made by Dubai World, but
due to credit crisis the situation has led to near-default sukuk repayment.
Declaration of trust and the guarantees were governed by English Law
• The UAE courts probably would not recognize the jurisdictional choice of the parties.
Contradictory issue pertaining guarantee made by Dubai World
• There was a disclaimer clause in the prospectus stating that the Govt. of Dubai will not have liability in respect of the Sukuk.
• However, guarantee was made by the Dubai World (state-owned co.) – implicitly it was guaranteed by the govt.
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