IslamicFinance.de

In the conventional finance space asset-backed financings have proved a successful method of funding social and civil infrastructure. However, in Islamic finance, asset-backed sukuk have not yet taken off. The majority of sukuk are more dependent on the creditworthiness of the sponsor, rather than the performance of the assets. The concept of securitisation of assets, limited in recourse solely by the performance of the assets underpinning them, has only enjoyed limited application in the Islamic finance space so far. For asset-backed sukuk to succeed, investors have to go beyond simply looking at the credit standing of government and quasi governmental entities and start looking at the actual cash flow and exposure to asset values.