Islamabad: Pakistan’s Meezan Bank plans to arrange the country’s first airtime-based sukuk, a format favoured by telecommunications operators wishing to tap liquidity in the Islamic capital markets.
The local-currency issuance would have a tenor of between five and 10 years and an approximate size of $68.5m, said Suleman Muhammad Ali, Vice-President of product development and Shariah compliance at Meezan. The sukuk would be issued in the fourth quarter of this year. Ali did not name the issuer. Sukuk that use intangible assets such as minutes of mobile telephone use have been tested elsewhere, allowing firms with limited physical assets to raise cash via Islamic finance, which follows religious principles such as bans on interest and gambling.
“The structure is based on ijara and sub-ijara of services. Assets are airtime (minutes) represented by prepaid calling cards and identified by the serial number of each card,” Ali said.
In an Islamic ijara deal, one party leases an asset to a client for an agreed price; unlike a conventional lease, the structure does not allow a lessor to charge interest on defaulted or delayed payments.
The airtime sukuk was approved in November by the sharia board of Meezan, the country’s first and largest Islamic bank. The sharia board is led by well-known scholar Muhammad Taqi Usmani.
“In terms of innovative sukuk structures, I believe that the local industry is way ahead compared to other global markets, partly due to the strict stance on tawarruq and commodity murabaha of the local sharia scholars,” Ali said.
Reuters
