Sukuk al-Ijarah

Sukuk al-Ijarah are the most widely issued class of Islamic investment certificates, structured as undivided ownership interests in assets that are leased to a lessee (typically the originator). Investors (Sukukholders) receive periodic rental income distributions that represent the return on their proportionate ownership of the underlying leased asset rather than interest payments. The typical structure involves: (1) an originator selling an asset to a Special Purpose Vehicle (SPV); (2) the SPV issuing Sukuk certificates representing beneficial ownership; (3) the SPV leasing the asset back to the originator under an Ijarah agreement; (4) rental payments from the originator flow through to Sukukholders as periodic distributions; and (5) at maturity, a purchase undertaking allows the originator to buy back the asset at a pre-agreed price, enabling principal redemption. AAOIFI Shariah Standard No. 17 governs Sukuk al-Ijarah, requiring genuine asset transfer, true leases (not financial leases disguised as sales), and permissible underlying assets. IFSB-7 addresses risk-weighting and capital adequacy for Ijarah Sukuk exposures. Sukuk al-Ijarah account for approximately 30-40% of global Sukuk issuance. The IOF CAPITAL_MARKETS rail provides a full Sukuk al-Ijarah issuance engine including SPV setup, asset registration, prospectus generation, investor allocation, periodic distribution calculation, and maturity redemption workflows.