Senior Participatory Sukuk

Abstract

Islamic finance is rapidly growing and developing. However, it is facing a challenge in providing sufficient products to meet the finance demand. Taking the sukuk as an example still, their market lack of diversification and most available structures end up with debt obligations. Thus Senior Participatory Sukuk comes to fill this gap. It designed to serve as a new proposed financing facility that is free from debt burden to corporations and financial institutions. This research is conducted to test the feasibility of the Senior Participatory Sukuk from the potential issuers perspective. In responding to the research aim, an exploratory qualitative method with interviews is utilized in this research. Six semi-structure interviews are conducted in corporation sector of Saudi Arabia. The researcher analyzes the data collected through thematic analysis. The results are embodied under four themes which are: Senior Participatory Sukuk features, levels of protection, other important factors and overview about the product. They indicate that there is a potential to use this product, however the participant corporations had a misconception among the prevailing sukuk and the Senior Participatory Sukuk, capital market authority should address the concerns of partnership and the intervention of the sukuk holder in the management. Also, the legal entities should be interact to study the seniority of the Senior Participatory Sukuk and its implication on the bank's contracts, developing a standardized contract for this sukuk. Furthermore, rating and pricing issues must be taken into consideration also.