Malaysia International Islamic Financial Centre (MIFC) : RAM Ratings expects hybrid sukuk to dominate future issuance

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Press Release

30 May | Tuesday

RAM Ratings expects hybrid sukuk to dominate future issuance

RAM Ratings notes the market’s growing preference for hybrid sukuk - a sukuk structure that combines two or more differing elements. These elements could comprise more than one Shariah contract, a mixture of debt and equity or underlying assets consisting of tangible and intangible assets.

Previously, sukuk structures had been predominantly structured using only one Shariah contract, e.g. ijarah, musharakah, mudharabah or commodity murabahah. However, conformity to the Accounting and Auditing Organisation of Islamic Financial Institutions’ (AAOIFI) Shariah standards has led to a progressive shift towards hybrid sukuk. “Given the wide acceptance of hybrid sukuk by almost all Islamic jurists, this structure is likely to dominate future sukuk issues,” highlights Ruslena Ramli, Head Islamic Finance at RAM.

The Islamic finance landscape has developed into a vibrant financial market that has attracted worldwide attention. Given its pace of progress, its products have evolved to cater to the needs of current times. The ongoing efforts to pursue a centralised global model could facilitate and strengthen the Islamic finance ecosystem. However, conformity with each jurisdiction’s standards and guidelines will still prevail when dictating the type of Shariah contract adopted.
In the latest issue of Sukuk Reflections, Amanie Advisors has collaborated with RAM Ratings to analyse various sukuk structures, together with a comparison between the types of Shariah contracts adopted by Malaysia and the Gulf Cooperation Council (GCC) countries through the past decade.

For a detailed analysis, please download the publication via RAM Ratings’ website, www.ram.com.my.

source: RAM Rating Services Berhad