Sukuk al-murabaha

Glossary

A form of sukuk derived from the murabaha financing structure. In a sukuk al-murabaha transaction:

A special purpose vehicle (SPV) buys from a supplier an asset the borrower has identified.
The SPV finances the purchase of these assets with the proceeds of a sukuk issuance.
The SPV sells the asset to the borrower for the original purchase price plus a pre-agreed profit.
The borrower pays the purchase price in installments.
The borrower sells the asset on the spot market and keeps the proceeds.
Following this transaction, the borrower has immediate access to cash (the proceeds of the asset sale) but its obligation to pay the purchase price to the SPV is deferred.

For a diagram of the structure of a typical sukuk al-murabaha transaction, see Islamic Finance Deal Structure: Sukuk al-murabaha.

For more information on Islamic finance in the US, see Practice Notes:

For more information on Islamic finance in the UK, see Practice notes:

Sukuk al-murabaha | Practical Law