Study And Overview Of Qatar Global Ijara Sukuk Finance Essay

An Muslim bond ( sukuk ) has economic features similar to those of a conventional bond, but is structured so as to be compliant with Sharia’a jurisprudence and can be sold to Islamic investors who are prohibited, by Sharia’a, jurisprudence from puting in conventional debt securities.

QSC purchased a certain land package from the Government of the State of Qatar. The land package was leased by QGS to the Government of the State of Qatar for a 7-year period matching to the continuance of the trust certifications. QSC declared that it would keep these assets in trust for the holders of the trust certifications. The rental rental payment from the Government of the State of Qatar to QGS will precisely fit the periodic distribution payments collectible on the trust certifications. The rental rental payment was calculated based on 6-month US dollar LIBOR plus a border.

This instance describes the Qatar Global Sukuk rated trust certifications ( Sukuk ) , the returns of which will finally be used for general support intents by the Government of the State of Qatar. The principle for this dealing is to let the Government of the State of Qatar to raise Sharia’a compliant financess.

The instance draws extensively on the offering handbill which is summarised for the reader.

1. Background to the Qatar Global Sukuk QSC

Katar

Location, Area and Historical Background

Qatar is an independent province in the Southern Arabian Gulf holding a land boundary line with Saudi Arabia and nautical boundaries with Saudi Arabia, Bahrain, the United Arab Emirates and Iran. The state extends over a peninsula about 185 kilometers long and between 55 to 100 kilometers broad and covers a entire country of 11,521 square kilometers, including a figure of islands. Doha is Qatar ‘s capital metropolis, the place of the Government and the state ‘s cultural, commercial and fiscal Centre. It is besides the location of Qatar ‘s chief port and the international airdrome.

Qatar has an waterless desert clime with low one-year rainfall and small flora or surface H2O.

Qatar has huge hydrocarbons resources within its district with both onshore and offshore oil Fieldss and the 3rd largest proven natural gas militias in the universe. This includes the North Field, the universe ‘s largest individual non-associated gas sedimentation in the universe.

Historically, the peninsula was inhabited by mobile folks, coming under the influence of several major Middle Eastern civilizations, including the Dilmun civilization, in 4,000-2,000 B.C. , the Umayadd and Abassid Caliphates ( 8th-13th centuries ) and the Ottoman Empire. In the sixteenth century, the Qatari peninsula came under the influence of, foremost, the Portuguese, and so the British. In 1916, the British concluded a pact with the governing al-Thani household under which Qatar became a British associated state. It remained so until September 1971 when the state declared independency. Qatar ‘s crude oil resources have led to rapid development and the building of a modern substructure.

Government Organisation and Political Background

Qatar is an absolute monarchy and has been ruled by the al-Thani household since the 19th century. In 1916, the al-Thanis entered into a pact with the British pursuant to which Qatar became a British associated state. Qatar declared independency on 3 September 1971. The current Emir, His Highness Sheikh Hamad bin Khalifa al-Thani, replaced his male parent as Emir and assumed his place on 27 June 1995. The Emir is the chief executive officer in Qatar, although the cabinet, appointed by the Emir, carries out the daily disposal of the state ‘s personal businesss.

Legal System and Enforceability of Opinions

The bench in Qatar is divided into two separate systems. The Civil and Commercial tribunals and the Sharia’a tribunals. Each system has its ain Court of Appeal, which is the highest tribunal for each system. Judges are appointed by a edict of the Emir on the recommendation of the Minister of Justice or Minister for Endowments and Religious Affairs.

Any difference relating to the Sukuk Certificates adjudicated in Qatar would be initiated in the civil and commercial tribunals which, harmonizing to present Qatari jurisprudence, have legal power over commercial differences. The Government is capable to accommodate under the civil and commercial codification of Qatar with regard to commercial minutess entered into by the Government, its ministries and sections. Under the civil and commercial codification, contractual commissariats for the charging and payment of involvement are allowable and enforceable in conformity with their footings, although a tribunal using Qatari jurisprudence may non implement such a proviso to the extent that such proviso provided for the payment of compound involvement. Due to the fact that there is no philosophy of adhering case in point in Qatar, the future attitude of the Qatari tribunals and Qatari jurisprudence, sing the payment and reception of involvement, and other affairs can non be predicted.

The economic system of Qatar ( at the clip of the Sukuk issue )

Qatar has a strong economic system dominated by oil and gas export grosss. Since the find of oil in Qatar in 1939, the state ‘s economic public presentation has mostly mirrored the fluctuations in oil monetary values in the international market. In the old ages of low oil monetary values. Qatar has witnessed important budget shortages, and when international oil monetary values have boomed, there have been marked budget excesss.

In 2002 the part of the oil and gas sector to nominal GDP was 59 per cent. Due to the economic system ‘s exposure to oil monetary value motions every bit good as the finite nature of oil militias, the Government has pursued a policy of economic variegation in advancing the development of energy-intensive heavy industries utilizing natural gas as fuel and promoting the engagement of private endeavors in the industry. At the same clip, the Government has privatised a figure of services to cut down force per unit area on the budget. Qatar is besides developing a modern substructure to ease and supply a model for future development.

Qatar ‘s natural gas resources, estimated to be 900 trillion three-dimensional pess, rank in size behind merely those of Russia. Qatar ‘s extended North Field natural gas militias contain the bulk of these militias and history for an estimated 5 per cent, of entire proved worldwide natural gas militias. The Government predicts that by 2008 the grosss of the export of LNG will transcend those of the export of oil without any cut in rough oil production degrees.

Qatar ‘s current economic stableness was reflected in the ascent by Standard & A ; Poor ‘s to Qatar, in July 2003, of Qatar ‘s recognition evaluation to A+ .

Gross Domestic Product

The chief constituent of GDP for the period 1998 -2003 was the oil and gas sector, the estimated value of which amounted to US $ 10.3 billion in 2002, stand foring about 59 per cent, of nominal GDP for that twelvemonth. In the non-oil sector, the finance, insurance and existent estate sector is estimated to hold accounted for US $ 1.3 billion in 2002, stand foring about 7.5 per cent, of nominal GDP in that twelvemonth. Grosss from the fabrication sector are estimated to hold reached US $ 989 million in 2002, stand foring about 5.7 per cent, of nominal GDP in that twelvemonth.

Qatar ‘s GDP has grown over the past five old ages in a form that mostly follows the fluctuations of international oil monetary values and the increased gross revenues of Liquefied Natural Gas ( LNG ) , with growing averaging 13.9 per cent between 2000 and 2002. The important decreases in universe oil monetary values and degrees of petroleum oil production in 1998 resulted in a contraction in Qatar ‘s economic system in that twelvemonth, while a significant addition in the monetary value of oil contributed to an improved GDP in 1999. In 2000, as oil monetary values reached a ten-year high and about doubled in footings of value, nominal GDP grew by 45.5 per cent, to US $ 17.6 billion. In 2001, when oil monetary values and production degrees fell, nominal GDP saw a autumn of 3.6 per cent. In 2002 there was a modest recoil of 2 per cent, to US $ 17.4 billion. Harmonizing to the Qatar Central Bank estimations, nominal GDP grew by 5.3 per cent. to US $ 4.9 billion at the terminal of the first one-fourth of 2003, compared to US $ 4.7 billion at the terminal of the last one-fourth of 2002. This addition mostly reflected the rise in universe oil monetary values due to the war in Iraq and break of South American oil industries.

Table 1 sets out inside informations of Qatar ‘s GDP at current monetary values by economic activity and as a per centum portion for each of the five old ages ended 31 December 2002.

Table 1

Qatar GDP constituents ( 1998-2002 )

Year Ended 31 December

1998

1999

2000

2001

2002

( US $ m )

( % )

( US $ m )

( % )

( US $ m )

( % )

( US $ m )

( % )

( US $ m )

( % )

Oil and gas sector

3,573

34.8

5,481

44.9

10,732

60.4

10,060

58.7

10,302

59.0

Non-oil and gas sector

Agribusiness and piscaries

70

0.7

71

0.6

66

0.4

69

0.4

70

0.4

Manufacturing

807

7.9

893

7.3

966

5.4

967

5.6

989

5.7

Electricity and H2O

168

1.6

176

1.5

214

1.2

216

1.3

218

1.3

Building and building

748

7.3

590

4.9

640

3.6

643

3.8

657

3.6

Trade, eating houses and hotels

869

8.5

882

7.2

1,030

5.8

1,035

6.1

1,043

6.0

Conveyance and communications

513

5.0

536

4.4

551

3.1

555

3.2

582

3.3

Finance, insurance and existent estate

1,238

13.5

1,269

10.4

1,292

7.3

1,297

7.6

1,317

7.5

Other services

2,270

22.1

2,290

18.8

2,268

12.8

2,284

13.3

2,288

13.1

a”ˆa”ˆa”ˆa”ˆ

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a”ˆa”ˆa”ˆa”ˆ

a”ˆa”ˆa”ˆ

a”ˆa”ˆa”ˆa”ˆ

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Entire non-oil and gas sector

6,683

65.2

6,716

55.1

7,028

39.6

7,066

41.3

7,164

41.0

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a”ˆa”ˆa”ˆ

a”ˆa”ˆa”ˆa”ˆ

Entire GDP

10,255

100

12,197

100

17,760

100

17,127

100

17,466

100

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Beginning: Supreme Council for Economic Affairs & A ; Investing

Oil and Gas Sector

The oil and gas sector, which consists of the production and export of rough oil and other hydrocarbons such as condensate, propane, butane and other natural gas liquids, is the chief sector of the Qatari economic system, with grosss from this sector accounting for about 60.4 per cent, 58.7 per cent. and 59 per cent of nominal GDP in 2000, 2001 and 2002 severally.

Gas constitutes Qatar ‘s chief hydrocarbon resource. The North Field is one of the universe ‘s largest non-associated ( i.e. , non portion of an oil reservoir ) gas sedimentations and presently histories for about 5 per cent. of worldwide gas militias. As at 31 March 2003, the North Field ‘s proved militias of gas were estimated by Qatar Petroleum to be in surplus of 900 trillion three-dimensional pess. Development of the North Field gas militias for export and as feedstock, for the domestic refinement and petrochemicals industry, is the Government ‘s economic and strategic precedence. Net incomes from exports of LNG and other merchandises based on gas, either as feedstock or a fuel beginning, are expected to stand for an progressively of import beginning of gross for the Government for the following several decennaries, peculiarly as Qatar ‘s oil militias begin to worsen.

2. Katar Global Sukuk QSC- The Offer

( Incorporated in Qatar with limited liability )

US $ 700,000,000 Trust Certificates due 2010

Issue Price: 100 per cent

The US $ 700,000,000 Trust Certificates due 2010 ( the “ Certificates ” or the “ Sukuk ” ) of Qatar Global Sukuk QSC ( the “ Issuer ” ) will be constituted by a declaration of trust dated on or about 9 October 2003 made by the Issuer. Pursuant to the Declaration of Trust, the Issuer will declare that it will keep certain assets, chiefly dwelling of a certain land package and rights under the related Master Ijara Agreement, upon trust perfectly for the holders of the Certificates pro rata harmonizing to the face sum of Certificates held by each Certificate holder.

On the 9th twenty-four hours of each April and October get downing in April 2004 the Issuer will do a Periodic Distribution an sum which is calculated on the footing of ( I ) LIBOR plus 0.40 per cent per annum, calculated on the outstanding chief sum of the Certificates as at the beginning of the relevant Return Accumulation Period on an actual/360 footing plus ( two ) get downing with the Periodic Distribution Date falling in April 2006, an Amortisation Payment of tenth part of the initial chief sum of the Certificates.

The Issuer will do such Periodic Distributions entirely from the returns received in regard of the Trust Assets which include rental payments under the Master Ijara Agreement, which rental payments will be calculated based on LIBOR plus a border, and will be the Periodic Distribution Amounts collectible to Certificate holders on the Periodic Distribution Date co-occuring with the payment day of the month for such rental.

Unless antecedently redeemed the Certificates will be redeemed on the Periodic Distribution Date falling in October 2010 at the Dissolution Distribution Amount.

The Certificates have non been and will non be registered under the United States Securities Act of 1933, as amended or with any securities regulative authorization of any province or other legal power of the United States and may non be offered, sold or delivered within the United States or to US Persons except pursuant to an freedom from, or in a dealing non capable to, the enrollment demands of the Securities Act. Consequently, the Certificates are being offered, sold or delivered entirely to non-US Persons ( as defined in Regulation S ) outside the United States in trust on Regulation S under the Securities Act ( “ Regulation S ” ) . Each buyer of the Certificates is herewith notified that the offer and sale of Certificates to its being made in trust on the freedom from the enrollment demands of the Securities Act provided by Regulation S.

Delivery of the Certificates in book-entry signifier will be made on the Shutting Date. The Certificates will be issued in registered signifier in minimal denominations of US $ 10,000 and built-in multiples of US $ 1,000 in extra thereof. Certificates will be represented at all times by involvements in a planetary registered certification without vouchers attached, deposited on or about the Shutting Date with HSBC Bank plc as common depository for Euroclear Bank SA/NV as operator of the Euroclear System ( “ Euroclear ” ) and Clearstream Banking, societe anonyme. Interests in the Global Certificate will be shown on, and transportations thereof will be effected merely through, records maintained by Euroclear and Clearstream, Luxembourg.

Joint Lead Directors

HSBC QIIB

3. Summary of the offering

The Parties

Qatar Global Sukuk QSC, a joint stock company incorporated in Qatar under Article 68 of the Commercial Companies Law, Law No. 65 of the twelvemonth 2002 ( the “ Issuer ” ) .

The authorized and issued portion capital of the Issuer is 30 Saudi arabian riyals divided into three ordinary portions of par value 10 Riyals each. The Issuer ‘s ordinary portions are owned by the Government and HSBC Bank Middle East Limited ( in the latter instance, entirely as agent for the Certificate holders ) . Pursuant to a Share Agency Declaration the made by HSBC Bank Middle East Limited the Share Agent holds its portion in the Issuer ( the “ Aureate Share ” ) as agent for and on behalf of Certificate holders.

The Government ( the “ Seller ” ) will convey to the Issuer ( as legal guardian and agent for and on behalf of Certificate holders ) rubric to a certain Land Parcel pursuant to the Purchase Agreement.

The Government will rent from the Issuer the Land Parcel on the footings set out in the Master Ijara Agreement for a period of seven old ages get downing on the Shutting Date and ending on the Periodic Distribution Date falling in October 2010.

HSBC Bank plc ( “ HSBC ” ) and Qatar International Islamic Bank ( “ QIIB ” ) are the “ Joint Lead Directors ”

The Issuer will move as legal guardian in regard of the Trust Assets for the benefit of Certificate holders in conformity with the Declaration of Trust and the Conditions.

4. Summary of the Certificates

Certificates

US $ 700,000,000 Trust Certificates due 2010 ( the “ Certificates ” or the “ Sukuk ” ) .

Shutting Date

9 October 2003.

Issue Price

100 per cent of the sum chief sum of the Certificates.

Periodic Distribution Dates

The 9th twenty-four hours of each April and October. get downing in April 2004.

Periodic Distributions

On each Periodic Distribution Date, Certificate holders will have, from moneys received in regard of the Trust Assets, a “ Periodic Distribution Amount ” equalling:

( I ) for each of the first four Periodic Distribution Dates, an sum equal to the merchandise of ( a ) LIBOR for such Return Accumulation Period plus the Margin ( B ) USA $ 700,000,000

( two ) for each subsequent Periodic Distribution Date, an sum equal to

( a ) an Amortisation Payment plus

( B ) the merchandise of ( a ) LIBOR for such Return Accumulation Period plus the Margin, ( B ) US $ 700,000,000 less the sum of all Amortisation Payments antecedently paid by the Issuer

“ Amortisation Payment ” means tenth part of the initial chief sum of the Certificates.

Purchase and Sale Undertakings

The Government will come in into a Purchase Undertaking, pursuant to which the Government will set about irrevocably to buy from the Issuer rubric to the Land Parcel at the Exercise Price on the day of the month specified by the Trustee to Certificate holders in conformity with the status for disintegration of the Trust following a Dissolution Event.

The Issuer will come in into a Sale Undertaking, pursuant to which the Issuer will set about irrevocably to sell to the Government, at the Government ‘s option, rubric to the Land Parcel at the Exercise Price on the Periodic Distribution Date falling in October 2008.

“ Exercise Price ” means an sum equal to USA $ 700,000,000 less the sum of all Amortisation Payments paid under the Master Ijara Agreement

Dissolution of the Trust

Upon a sale of the Land Parcel to the Government pursuant to the Purchase Undertaking or Sale Undertaking, and in conformity therewith, the Government will be required to lodge the Exercise Price into the Transaction Account on or before the relevant day of the month for the salvation of the Certificates and disintegration of the Trust.

Upon reception of the Exercise Price from the Government in conformity with the footings of the Purchase Undertaking or the Sale Undertaking, such sum, together with Rentals received until the day of the month of the expiration of the rental under the Master Ijara Agreement, will be applied to deliver the Certificates

The Trust will be dissolved on the Scheduled Dissolution Date and the Trustee will deliver the Certificates on such day of the month at the Dissolution Distribution Amount.

Form and Delivery of the Certificates

The Certificates will be issued in registered planetary signifier merely, without vouchers attached.

The Certificates will be represented by involvements in the Global Certificate deposited with a common depository for Euroclear and Clearstream, Luxembourg.

Denomination

The Certificates will be issued in minimal denominations of US $ 10,000 and built-in multiples of US $ 1,000, in extra thereof.

Status

Each Certificate represents an undivided good ownership in the Trust Assets and will rank pari passu, without any penchant, with the other Certificates.

The Trust Assetss

The “ Trust ” is the trust created by the Issuer under the Declaration of Trust.

The “ Trust Assets ” are the Land Parcel, all of the Issuer ‘s rights, rubric, involvement and benefit, present and future, in, to and under the Transaction Documents to which it is a party, all monies standing to the recognition of the Transaction Account, and all returns of the foregoing.

The Purchase Agreement

Pursuant to this Agreement, the Seller will sell to the Issuer the Land Parcel. The gross returns received by the Issuer from the issue and sale of the Certificates will be used to pay the aggregative purchase monetary value collectible by the Issuer to the Seller for the Land Parcel.

Land Parcel

The “ Land Parcel ” is the secret plan of land designated for the proposed development of Hamad Medical City in Doha, Qatar

The Master Ijara Agreement

Under the footings of a Master Ijara Agreement dated the Shutting Date between the Issuer as lease giver and the Government as leaseholder, the Issuer will hold to rent to the Government, and the Government will hold to rent from the Issuer, the Land Parcel during the term get downing on the Shutting Date and widening to the Scheduled Dissolution Date.

The rental payments under the Master Ijara Agreement will be calculated by mention to LIBOR plus the Margin, and will be the Periodic Distribution Amounts collectible on the Periodic Distribution Date co-occuring with the Rental Payment Date for such Rental. Leases will be re-calculated semi-annually by mention to LIBOR.

The Government will be obligated to pay Leases on the 9th twenty-four hours of each April and October, get downing in April 2004 up to and including October 2010.

Transaction Account

The Payment Administrator will keep and run the Transaction Account on behalf of the Trust. Distributions of monies deducing from the Trust Assets will be made to holders of the Certificates from financess standing to the recognition of the Transaction Account.

Leases

The Rentals will be paid by the Government on each Periodic Distribution Date straight to the Transaction Account. Upon reception of each Rental on the relevant Periodic Distribution Date, the Payment Administrator, will retreat such monies from the Transaction Account and utilize such sums to do payments to the Certificate holders

Limited Recourse

Each Certificate represents entirely an undivided good ownership involvement in the Trust Assets. Holders of the Certificates will hold no resort to any assets of the Issuer other than the Trust Assets. Any creditor of the Issuer ( other than Certificate holders ) will hold no resort to the Trust Assets. Returns of the Trust Assets are the exclusive beginning of payments on the Certificates. The Certificates do non stand for an involvement in or duty of any of the Issuer, the Government, the Joint Lead Directors, the Agents or the Payment Administrator or any affiliate of any of the foregoing entities.

Negative Pledge

Equally long as any of the Certificates remains outstanding, the Issuer and the Government have undertaken that neither will procure any of its present or future liability for borrowed money by any lien, pledge, charge or other security involvement upon any of its present or future assets, belongingss or grosss.

Enforcement

Following the distribution of the Trust Assets to the Certificate holders, to the extent permitted under the Conditions and the Declaration of Trust, the Trustee shall non be apt for any farther amounts or assets, and consequently such Certificate holders may non take any action against the Trustee or any other individual to retrieve any such amount or plus in regard of the Certificates or the Trust Assets.

Use of Returns

The gross returns of the issue of the Certificates will be used by the Issuer to buy the Land Parcel from the Seller pursuant to the Purchase Agreement.

Rating

The Certificates have been rated “ A+ ” by S & A ; P.

Regulating Law

The Declaration of Trust, the Agency Agreement, the Certificate Purchase Agreement and the Certificates will be governed by English jurisprudence.

The Purchase Agreement, the Master Ijara Agreement, the Purchase Undertaking, the Sale Undertaking, the Agency Declaration, the Share Agency Declaration and the Costs Undertaking will be governed by Qatari jurisprudence.

5. The Trust Assets and the Master Ijara Agreement

The Trust Assets are comprised of the Land Parcel, all of the Issuer ‘s rights, rubric, involvement and benefit, present and future, in, to and under the Transaction Documents, all monies standing to the recognition of the Transaction Account, and all returns of the foregoing.

The Land Parcel

The “ Land Parcel ” is the secret plan of land intended for the proposed development of Hamad Medical City mensurating about 337,540 square metres located in Doha, Qatar, bordered by the undermentioned streets:

North, Mohammed Bin Thani Street ;

East, Al-Istiqlal Street ;

South, Asiad 2006 Street ; and

West, Ahmad Bin Ali Street,

with title figure 99679 registered in the Department of Real Estate Registration in Doha. The Land Parcel excludes all edifices and all other fixtures organizing portion thereof at any clip, in regard of which the acquisition, building or completion costs are paid for by the Lessee.

Purchase Agreement

Pursuant to the Purchase Agreement, the Seller will sell to the Issuer the Land Parcel ( free from all claims and burdens and with all attached or accrued rights as of the day of the month of the Purchase Agreement ) . The gross returns received by the Issuer from the issue and sale of the Certificates will be used to pay the purchase monetary value for the Land Parcel.

Maestro Ijara Agreement

Under the footings of a Master Ijara Agreement the Issuer as lease giver and the Government as leaseholder, the Issuer will hold to rent to the Government, and the Government will hold to rent from the Issuer, the Land Parcel during the term get downing on the Shutting Date and widening to the Scheduled Dissolution Date.

Under the footings of the Master Ijara Agreement, the Government will hold that the Issuer shall non under any fortunes be apt to the Government or to any 3rd party for any cost, claim, demand, loss, harm or disbursal of any sort or nature caused straight or indirectly by, or out of, the usage of any portion or the whole of the Land Parcel. The Government will hold to indemnify and maintain indemnified and salvage harmless the Issuer against all and any such costs, claims, demands, losingss, amendss and disbursals.

Under the footings of the Master Ijara Agreement, the Government shall, at its ain cost and disbursal, be responsible for the public presentation of all General Maintenance required for the Land Parcel. General care means all fixs, replacings, Acts of the Apostless, and care and upkeep plants required for the general use and operation of the Land Parcel and to maintain, fix, maintain and continue the Land Parcel in good order and status, and in conformity with such care, fix and upkeep criterions and processs by and large expected in the ordinary class of concern.

The rental payments under the Master Ijara Agreement will be calculated by mention to ( I ) LIBOR plus the Margin plus ( two ) get downing with the Rental Payment Date falling in April 2006, an Amortisation Payment, and will be the Periodic Distribution Amounts collectible on the Periodic Distribution Date co-occuring with the Rental Payment Date for such Rental. Leases will be reA­calculated semi-annually based on LIBOR.

The Government will be obligated to pay Leases on the 9th twenty-four hours of each April and October, get downing in April 2004 up to and including October 2010.

Under the Master Ijara Agreement, if payment of a Rental is non made to the Issuer, in full, on its due day of the month for payment, the Government irrevocably undertakes to donate straight, in conformity with Sharia’a rules, a late payment sum to be paid to a charity of the Issuer ‘s pick in regard of the period from and including the due day of the month for payment.

Under the Master Ijara Agreement, the Government will bear the full hazard of loss of or damage to the Land Parcel or any portion thereof originating from the negligent or improper use or operation thereof by the Government, and will indemnify the Issuer against the same.

In the Master Ijara Agreement, the Government will covenant that from the Shutting Date and for so long as its liabilities under the Master Ijara Agreement have non been discharged, the Government will non without the anterior written consent of the Issuer create or license to exist any burden over all or any of its present or future grosss or assets other than those permitted burdens specified therein.

6. Investing considerations for investors in the Qatar planetary sukuk

There is presently no secondary market for the Certificates and there may be limited liquidness for Certificate holders.

There can be no confidences that a secondary market for the Certificates will develop, or if a secondary market does develop, that it will supply the Certificate holders with liquidness of investing or that it will go on for the life of the Certificates. The market value of Certificates may fluctuate. Consequently, any sale of Certificates by Certificate holders in any secondary market which may develop may be at a price reduction from the original purchase monetary value of such Certificates. Consequently, an investor in the Certificates must be prepared to keep the Certificates for an indefinite period of clip or until their adulthood.

The Issuer has no operating history.

The Issuer is a freshly formed entity and has no important runing history. The Issuer will hold no material assets other than the Land Parcel, which will be leased to Qatar pursuant to the Master Ijara Agreement. The Issuer will non prosecute in any concern activity other than the issue of the Certificates and the acquisition and rental of the Land Parcel. Payments by Qatar under the Master Ijara Agreement, the Purchase Undertaking and the Sale Undertaking, which payments are direct duties of Qatar to the Issuer, will be the Issuer ‘s chief beginning of financess.

The certifications are limited resort, unbarred duties of the Trust.

Recourse to the Issuer is limited to the Trust Assets and returns of the Trust Assets are the exclusive beginning of payments on the Certificates. Upon happening of a Dissolution Event, the lone redress available to Certificate holders will be to exert the option under the Purchase Undertaking to necessitate Qatar to buy the Land Parcel at the Exercise Price. Certificate holders will otherwise hold no resort to any assets of Qatar ( to the extent it fulfils all of its duties under the Transaction Documents to which it is a party ) , the Joint Lead Directors, the Agents or the Payment Administrator or any affiliate of any of the foregoing entities in regard of any deficit in the expected sums from the Trust Assets.

Katar is obliged to do its payments under the Transaction Documents to which it is a party straight to the Issuer, and the Issuer, as legal guardian for the benefit of the Certificate holders, will hold direct resort against Qatar to retrieve payments due to the Issuer from Qatar pursuant to the Transaction Documents to which Qatar is a party. There can be no confidence that the net returns of the realization of, or the enforcement with regard to, the Trust Assets will be sufficient to do all payments due in regard of the Certificates.

The evaluations on the Certificates may be changed at any clip and may adversely impact the just market value of the certifications.

It is a status to the issue of the Certificates that the Certificates be rated “ A+ ” by S & A ; P upon issue. The evaluation addresses the likeliness of full and timely payment to the Certificate holders of all payments of Periodic Distribution Amounts on the Certificates on each Periodic Distribution Date.

The evaluations of the Certificates will be based chiefly on the recognition evaluation of Qatar. If S & A ; P lower their evaluations of Qatar, the evaluation of the Certificates may be lowered by S & A ; P. A evaluation is non a recommendation to buy, keep or sell the Certificates. There is no confidence that a evaluation will stay in consequence for any given period of clip or that a evaluation will non be lowered or withdrawn wholly by an delegating evaluation bureau. If the evaluations ab initio assigned to the Certificates are later lowered or withdrawn for any ground, no individual or entity will be obligated to supply any extra recognition sweetening with regard to the Certificates. Any decrease or backdown of a evaluation may hold an inauspicious consequence on the liquidness and market monetary value of the Certificates.

6. Case Study inquiries

Following the recent twine of successful Sukuk issues, and the fact that they are a comparatively new construct in corporate finance, your employer, an Investment Bank, has selected your group to do presentations to the Board sing the cardinal issues involved.

Your group must see the undermentioned inquiries and you must show your findings to the whole category. Please be ready to explicate any proficient constructs to the category. You will be expected to support your replies.

Remember that “ clip is money ” and that your responses must be compendious and non excessively descriptive. In other words – get to the point! !

1. Describe the exact nature of the Qatar Sukuk

2. What Islamic manners of finance underpin the Qatar Sukuk?

3. Describe how these manners of finance work and the exact relationship they have with the Qatar Sukuk

4. What investing considerations would you necessitate to take history of when sing puting in these Sukuk?

5. Is Qatar a good topographic point to put?

6. What Sharia’a Board demands were put in topographic point?

7. Are issues of corporate administration relevant to this issue?

8. What was advanced about this issue?

9. How was the issue rated and by whom?

10. was the issue a success?

11. What lessons can be learnt for the issue of future sukuk? How do the critical factors for Qatar Sukuk comparison with those for the other Sukuk issued?

Identify the undermentioned parties in the Qatar Sukuk:

Issuer

Ownership of the Issuer

Seller

Leaseholder

Identify and explicate the undermentioned elements of the Sukuk Certificates:

Form and Delivery of the Certificates

Clearance and Colony

Denominations

Status

The Trust Assetss

Purchase Agreement

Land Parcel

The Master Ijara Agreement

Leases

Limited Recourse

Negative Pledge

Use of Returns

Listing

Rating

Regulating Law

Demonstrate with a flow chart the nature of the implicit in minutess.

Recognitions

The writer would wish to admit pulling on the Issue Prospectus for this work

About the Writer

Brian Kettell

Brian Kettell worked for several old ages as an Economic Advisor to the Bahrain Monetary Agency ( now the Central Bank of Bahrain ) with legion Islamic banking duties. This Muslim banking experience has been reinforced, most late, whilst working for the Central Banks of Iran and Syria.

His banking and fiscal background was acquired whilst working for the Arab Banking Corporation in Bahrain, Citibank, American Express and Shearson Lehman.

Brian has taught at a figure of universities worldwide including the London School of Economics, London University and the City University of Hong Kong. He has worked as a visiting professor at the Universities of Syracuse and Maryland and is a visiting professor at the Business Schools of Lille, Dijon and Rennes.

Brian graduated with an M.Sc. ( Econ ) from the London School of Economics. He has published over 100 articles in diaries, concern magazines and the fiscal imperativeness with articles in Islamic Business and Finance, the Central Banking Journal, Euromoney, the Securities Journal and the International Currency Review. He has published 14 books on banking and fiscal markets. These are:

Muslim Sukuk: A Definitive Guide to Islamic Structured Finance

Islamic Banking and Finance in the Kingdom of Bahrain ( BMA )

Fiscal Economics ( FT-Prentice Hall )

Economicss for Financial Markets ( Butterworth-Heinemann )

What Drives Currency Markets ( FT-Prentice Hall )

What Drives Fiscal Markets ( FT-Prentice Hall )

The Valuation of Internet Stocks ( Butterworth-Heinemann )

The Federal Reserve System ( FT-Prentice Hall )

The Finance of International Business ( Graham and Trotman )

Businessman ‘s Guide to the Foreign Exchange Market ( Graham and Trotman )

The International Debt Game ( Graham and Trotman )

Monetary Economics ( Graham and Trotman )

The Foreign Exchange Handbook ( Graham and Trotman )

Gold ( Graham and Trotman )

Brian works as a specializer trainer in Islamic banking. He can be contacted on brian.kettell @ islamicbankingcourses.com Details of his preparation classs can be found on www.islamicbankingcourses.com