In this memorandum, the mechanics of Sukuk Issuance is broadly
outlined and some key information is provided about the regulations
on sukuk issuance in TR.
Sukuk in general
In essence, Sukuk issuance is an asset based securitization. In
our article about murabaha, it is mentioned that the Islamic
financial institutions particularly deal with murabaha financings,
in that they purchase goods and services from vendors on spot basis
and then sell those commodities to their clients on deferred
payment basis. As a result of these transactions, the banks
accumulate receivables from its clients arising out of the murabaha
contracts. Likewise, similar receivables arise out of financial
leasing agreements. As is the case with other asset backed
securitizations, it is possible for the banks (originator) to
transfer these receivables to third parties (special purpose
vehicles) in return for a consideration (the capital raised from
the sukuk investors). Sukuk issuance steps in
