Islamic Capital Market is a long term market transactions are carried out in ways that does not conflict with the conscience of Muslims and Islam religion. It follows the religious law or Shariah compliance that is free from any activities prohibited by Islam such as usury (riba), coercion, ambiguity (gharar), and gambing (maysir). The Shariah Advisory Council (SAC) was established in May 1996 as advisor of the Comission on Shariah matters especially in Islamic Capital Market. The Malaysia Islamic Capital Market has experienced phenomenal growth and raised the bar globally for product innovation and financial intermediation. Islamic financial system is running with conventional system has seen a continuous development in the Gulf cooperation council (GCC) countries. While it has also get success to attract financial centers of world big countries such as UK, USA, France, China, Italy, Korea, Singapore and Japan. Furthermore, this market comprises the Islamic equity sector and fixed income. Various Islamic Capital Market products are available especially for Muslims who only seek into invest and transact in it such as Islamic Unit Trust, Sukuk, Shariah Indices and warrants.

1. EBB 30103
ISLAMIC CAPITAL MARKET
STRUCTURES OF SUKUK AND CONTRACTS OF NOMURA
SUKUK AL-IJARAH

2. INTRODUCTION
• Islamic Capital Market is a long term market
transactions
• It follows the religious law or Shariah compliance that is
free from any activities prohibited by Islam
• The Malaysia Islamic Capital Market has experienced
phenomenal growth and raised the bar globally for
product innovation and financial intermediation
• Various Islamic Capital Market products are available
especially for Muslims who only seek into invest and
transact in it such as Islamic Unit Trust, Sukuk, Shariah
Indices and warrants

3. INTRODUCTION
• According from this assignment, we are given the task
to elaborate and analyze about Nomura Sukuk Ijarah.
Based on the case study that we received
• we will analyze how, why, what, and when Nomura
Holdings applied Sukuk Ijarah as their business
structures
• we provide a comprehensive review of the Nomura
Holdings on Islamic products development, operations in
practice and issues of sukuk ijara
• we discuss what is sukuk and its importance, study of
some structures and sukuk types
• we also analyze the different of sukuk and bond that
are currently utilized by Islamic Financial Institutions

4. WHAT IS SUKUK AND ITS IMPORTANCE
• An investment / trustee certificate
• It is tradable instruments in Muslim societies
• It referred to as Islamic bonds and subjected to
comparison with conventional bonds
• It intended to raise external financing just like
bonds, their operational, legal and regulatory
frameworks are vastly different

5. THE CONCEPT OR STRUCTURES OF SUKUK
• AAOIFI has specified 14 categories of permissible
Sukuk
• It depends on various factors, including the character
of the underlying assets, taxation and regulatory
considerations, the targeted investor base and the
views of the Shari’ah scholars who must approve the
sukuk issuance
• The most commonly used sukuk structures in the
current market are ijarah, murabaha and mudarabah-
wakala

6. THE CONCEPT OR STRUCTURES OF SUKUK
• Structured as corporate credit-risk instruments
• In a default and redemption scenario, the sukuk holders
would not have recourse to the assets themselves
• Redemption is effect by the sukuk holders exercising their
rights against the originator under a purchase undertaking
• Sukuk certificates represent an underlying ownership
interest in an asset from a Shariah perspective, the
commercial and economic reality is that most issued
sukuk are unsecured and equivalent to conventional
bonds

7. TYPES OF SUKUK

8. SUKUK IJARAH

9. SUKUK MURABAHAH

10. SUKUK MUSHARAKAH

11. SUKUK WAKALAH

12. CONVENTIONAL BOND VS SUKUK
Bond Sukuk
Asset
ownership
Bonds don’t give the investor a share of
ownership in the asset, project,
business, or joint venture they support.
They’re a debt obligation from the
issuer to the bond holder.
Sukuk give the investor partial
ownership in the asset on
which the sukuk are based.
Investment
criteria
Generally bonds can be used to finance
any asset, project, business or joint
venture that complies with local
legislation.
The asset on which sukuk are
based must be shariah
compliant.

13. Issue unit Each bond represents a share of debt. Each sukuk represents a share of
the underlying asset.
Issue price The face value of a bond price is based on the
issuer’s credit worthiness including its rating.
The face value of sukuk is based
on the market value of the
underlying asset.
Investment
rewards
and risks
Bond holders receive regularly scheduled
(often fixed rate) interest payments for the
life of the bond, and their principal is
guaranteed to be returned at the bond’s
maturity date.
Sukuk holders receive a share of
profits from the underlying asset
(accept a share of any loss
incurred).
Effects of
costs
Bond holders generally aren’t affected by
costs related to the asset, project, business or
joint venture they support. The performance
of the underlying asset doesn’t affect investor
rewards.
Sukuk holders are affected by
costs related to the underlying
asset. Higher costs may translate
to lower investor profits and
vice versa.

14. OVERVIEW OF NOMURA SUKUK AL-IJARAH
• Nomura is a leading financial service in the Asia.
• Based in Tokyo and employs over 26,000 staff worldwide.
• Nomura has appoint Kuwait Finance House for issuance 2 years
Sukuk al-Ijarah worth USD 100 million.
• First United State dollar dominated Sukuk for Japanese country.
• It is under Framework of Issuanceof Foreign Currency-
Denominated Bonds and Sukuk Malaysia

15. Structure of Nomura Holdings Sukuk
(1) Issuance

16. Structure of Nomura Holdings Sukuk
(2) Dividend Payment

17. Structure of Nomura Holdings Sukuk
(3) Redemption

18. ISSUES OF NOMURA SUKUK AL-IJARAH
• to legally recognizing sukuk issuance and ensuring
the stability of laws regarding sukuk
• to lowering sukuk-related costs to competitive
levels by taxing them at the same rate as
conventional bonds.

19. RECOMMENDATION
• operating Islamic financial businesses overseas
(Muslim country)
• Increase investment on global Islamic market

20. CONCLUSION
• Basically, the shift towards Islamic Capital Market has
forced developers to pay attention towards investors
• Providing products with big profitable return is no
longer sufficient , satisfying customer’s effective needs
has become increasingly important in the current
Islamic economic systems.
• Despite this, sukuk could become an important method for
funding the expansion of business in the Islamic world for
Japanese companies
• the global weighting of Islamic markets will increase in step
with income growth in Islamic countries