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Islamic Finance Classifications

June 2014

Islamic Finance Classifications – June 2014

The distinction we apply is between

Islamic Finance structures which mirror conventional bank financings on the one hand and conventional bond financings on the other. Following on from that further distinctions are made based on the type of Islamic finance structure:

Ijara (lease based); mudaraba (cost-plus purchase intermediation); istisna (manufacture); musharaka (lender-borrower joint venture) and wakala (trust).

Debt Capital Markets

Islamic Finance

Islamic Finance Bank Loans

Other DCM

Islamic Finance Bonds and Sukuk

Wakala

Wakala

Ijara

Musharaka

Ijara

Mudaraba

Musharaka

Istisna Murabaha

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Wakala Example – Emaar Malls Reg S Sukuk

• Emaar Malls Group 10 Year Wakala Sukuk Issuance - Emaar Malls the operator of the biggest shopping mall in Dubai, has issued a USD750m Reg S sukuk with a stipulated profit rate of 4.564 per cent, indicating a yield of approximately 182 basis points over mid-swaps. This represents a good outcome for the issuer and clearly Dubai has benefitted from some of the negative noise surrounding other emerging market countries. The bonds utilise a wakala structure (similar to a true sale securitisation) issued via a Cayman Islands SPV. The bonds are rated Baa2 by Moodys Investor Service and BBB- by Standard and Poor’s.Financial Centre : DubaiLaw Firm : LinklatersLawyer : Jonathan FriedPractice Area : Debt Capital MarketsClassification : Islamic FinanceSub-classification : Islamic Finance Bonds and Sukuk, Wakala:Industry : Real Estate Investment & ServicesAdvised Party : IssuerValue USD Equiv: 500.01-1000.00MIssuer Jurisdiction : UAEListing Jurisdiction : UAE

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Emaar Malls Group Wakala Bonds due 2024

Emaar Malls (as Seller of Wakala Assets)

Issuer/Trustee

Certificate Holders

Emaar Malls (as Servicer)

Emaar Malls (as Purchaser of Wakala

Assets)

Dissolution Payment at Maturity – Trust Dissolved , Re-purchase of Wakala Assets

Sale of Wakala Assets Asset Servicing Agreement

Declaration of Trust

Orphan SPV (Cayman Islands)

Wakala Assets = real estate assets owned by Emaar Mall

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