Kyrgyzstan strives to become an Islamic finance hub of Central Asia and is the pioneer of Islamic certificates (sukuk) issuance in the region. Interstan Securities is at the forefront of developing standards for the issuance of Islamic securities and offers a holistic range of services to companies (originators) wishing to explore this route of raising finance.
The following Sukuk formats are available in Kyrgyzstan and may be arranged by Interstan Securities:
- Islamic leasing certificates (Sukuk al Ijara)
- Islamic asset financing certificates (Sukuk al Istisna)
- Islamic investment management certificates (Sukuk al Mudaraba)
- Islamic investment agency certificates (Sukuk al Wakala Bi Al Istithmar)
- Islamic partnership certificates (Sukuk al Musharaka)
Issuance of Islamic certificates is done through a specially designed SPV called ‘Islamic Special Finance Company’ which is to be backed by the end recipient of financing called ‘Originator’. Under Kyrgyz law, the Islamic Special Finance Company must remain a vehicle dedicated exclusively to servicing the securities issue throughout the issue’s duration.
Apart from the Sharia-based restrictions which the issue must adhere to (such as the prohibition on fixed interest and on investing into Sharia-prohibited activities), Islamic certificates are a much more flexible fundraising instrument as compared to bonds and equity under the Kyrgyz law. In fact, almost any business investment deal may be structured into a Sukuk.