Understanding Sukuk

The most commonly used sukuk structure is that of sukuk al-ijara. The popularity of this structure can be attributed to a number of different factors; some commentators have described it as the classical sukuk structure from which all other Sukuk structures have developed, whilst others highlight its simplicity and its favor with Shari’a scholars as the key contributing factors. In the Islamic finance industry, the term “ijara” is broadly understood to mean the ‘transfer of the usufruct of an asset to another person in exchange for a rent claimed from him’ or, more literally, a “lease”.