Islamic Vs Modern Bond

Islamic vs. Modern Bond Market PROF. DR. MOHD. MA’SUM BILLAH (e-mail: [email protected])

INTRODUCTION

accounts cannot be sold to other investors.i

A bond is a "security" which

The legal documentation for a

gives the holder a financial claim on the

bond is required to specify the terms for

issuer. This claim protects the holder in

both interest and principal payments.

circumstances in which the issuer is

Interest can be paid monthly, semi-

unable to pay the amount due. Bonds

annually or annually. This makes a

bear certain similarities to savings

difference to the compounding of the

accounts. When an investor deposits

interest and will affect the trading of a

money in a savings account, in effect,

bond. Most bonds are pay interest semi-

that investor is lending the bank money.

annually

The bank pays the investor interest on

"Eurobonds", which trade in Europe, pay

the deposit. Similarly, the investor who

interest

buys bonds lends the issuer money in

Securities (MBS) and Asset-Backed

return for interest payments. When the

Securities

bonds mature (come due), the investor

monthly, reflecting the payment terms of

will receive the principle amount of the

the underlying mortgages and loans. The

bonds back, as he would have if he had

currency of payments is important. Some

withdrawn the amount from the savings

bonds have the coupon paid in one

account. The major difference between

currency and the principal in another.

savings accounts and bonds is that

Bonds which pay part of their principal

investors can sell their bonds before they

before maturity are said to "amortize"

mature to other investors. Savings

in annually. (ABS)

North

America.

Mortgage-Backed are

pay

interest

their principal, this is the case with many

investment bank underwrites securities

mortgage bonds.

and then sells them to the public.

Bond

market

comprises

of

primary market and secondary market.

Secondary Market: A financial market in

The primary bond market is where the

which

bonds are initially issued, while the

previously issued, can be resold. It could

secondary market where the bonds are

be an organized market, such as KLSE,

resold to other investors. Islamic bonds

or over-the counter (OTC) market in

are also having primary and secondary

which dealers at different locations stand

markets. The main difference, however,

ready to buy or sell securities over the

is the way the bonds are issued and

counter to whoever accepts their price.

securities,

that

have

been

traded afterwards. In the process of

Bonds generally can be traded

Islamic bond issuance bay’ al-‘Inah is

anywhere in the world as long as a buyer

used to securitize the instrument in the

and a dealer can strike a deal. There is

primary market, while in the secondary

no central place or exchange for bond

market, bay’ al-Dain is used in order to

trading, as there is for publicly traded

legalize reselling of the bonds. Such

stocks. The bond market is known as an

process is mostly used in the Malaysian

“over-the-counter” market, rather than

market, while most of the Middle-

an exchange market. There are some

Eastern countries do not accept it. The

exceptions to this however. For example,

proposed alternative is Islamic bonds

some corporate bonds in the United

based on Muqaradah.

States are listed on the exchange. Also, bond futures and some type of bond

CONVENTIONAL

BOND

majority of the bonds do not trade on

MARKET Primary market: A financial market in which new issues of a security, such as a bond or a stock, are sold to initial buyers by

the

agency

corporation borrowing

options are traded on exchanges. But the

or the

government funds.

The

exchanges.

MARKET PARTICIPANTS Dealers: While investors can trade marketable funds among themselves whenever they want, trading is usually

done

with

bond

dealers,

more

Investors: Bond investors include

specifically, the bond trading desks of

financial institutions, pension funds,

major investment dealers. The dealers

mutual funds and governments from

occupy center stage in the vast network

around the world. These bond investors,

of telephone and computer links that

along with the dealers, comprise the

connect the interested players. Bond

"institutional

dealers usually make the market for

blocks of bonds are traded. A trade of

bonds. What this means is that the dealer

$1-million-worth of bonds would be

has traders whose responsibility is to

considered a small ticket. There is no

know all about a group of bonds and to

size limit, and trades involving $500

be prepared to quote a price to buy and

million or $1 billion at a time can take

sell them.

place.

There

market",

similarly

where

is

large

no

size

restriction in the "retail market," which The role of the dealers is to provide

essentially involves individual investors

liquidity for bond investors, thereby

buying and selling bonds with the bond

allowing investors to buy and sell bonds

trading desks of investment dealers.

more

However, the size of trades is usually

easily

and

with

a

limited

concession on the price. Dealers also

under $1 million.

buy amongst themselves, either directly or anonymously via bond brokers. The

TYPES OF BONDS

aim of trading is to take a spread

Convertible bonds: A convertible bond

between the price the bonds are bought

is a bond that gives the holder the right

at and the price they are sold at. This is

to convert or exchange the par amount of

the main way that bond dealers make (or

the bond for common shares of the

lose) money. Dealers often have bond

issuer at some fixed ratio during a

traders located in the major financial

particular period. As bonds, they have

centers and are able to trade bonds 24

some characteristics of fixed income

hours a day (although not usually on

securities. Their conversion feature also

weekends).

gives them features of equity securities.

Brokers: Brokers are agents who match buyers with sellers of securities.

Extendible/Retractable

bonds:

Extendible and retractable bonds have

more than one maturity date. An

British pounds in the British bond

extendible bond gives its holder the right

market are known as "Bulldogs". Yen

to extend the initial maturity to a longer

denominated bonds by foreign issuers

maturity date. A retractable bond gives

are known as "Samurai" bonds.

its holder the right to advance the return of principal to an earlier date than the

Government bonds: Governments have

original

use

the power to print money to pay their

extendible/retractable bonds to modify

debts, as they control the money supply

the term of their portfolio to take

and currency of their countries. This is

advantage of movements in interest

why most investors consider the national

rates. The characteristics of these bonds

governments of most modern industrial

are a combination of their underlying

countries to be almost "risk-free" from a

terms. When interest rates are rising,

default point of view.

maturity.

Investors

extendible/retractable bonds act like

Corporate Bonds: A corporate

bonds with their shorter terms When

bond is a loan made by a corporation in

interest rates fall, they act like bonds

return for a specified amount of interest

with their longer terms.

and the repayment of the face value of A

the bond at a specified maturity dateii.

"foreign currency" bond is a bond that is

The creditworthiness of corporate bonds

issued by an issuer in a currency other

is tied to the business prospects and

than its national currency. Issuers make

financial capacity of the issuer. The

bond issues in foreign currencies to

business prospects of companies are

make them more attractive to buyers and

dependent on the economy and the

to

competitive

Foreign

take

Currency

advantage

interest

rate

currency

bonds

of

bonds:

international

differentials. can

Foreign

"swapped"

or

situation

of

industries.

Industries with stable revenues and earnings

are

called

"non-cyclicals",

converted in the swap market into the

where as those whose revenues and

home currency of the issuer. Bonds

earnings rise and fall with the economy

issued by foreign issuers in the United

and

States market in U.S. dollars are known

"cyclicals".

as "Yankee" bonds. Bonds issued in

financial risk because of high levels of

commodity

prices

are

called

Companies

that

have

debt and variable revenues and earnings

security" (IPS) are principal indexed.

are called "below investment grade" or

This means their principal is increased

"junk"

their

by the change in inflation over a period.

speculative nature. Higher quality bonds

In most countries, the Consumer Price

are considered "investment grade".

Index (CPI) or its equivalent is used as

bonds

because

of

an inflation proxy. As the principal High Yield or Junk bonds: A high yield,

amount increases with inflation, the

or "junk", bond is a bond issued by a

interest rate is applied to this increased

company that is considered to be a

amount. This causes the interest payment

higher credit risk. The credit rating of a

to increase over time. At maturity, the

high

considered

principal is repaid at the inflated amount.

below

In this fashion, an investor has complete

"investment grade". This means that the

inflation protection, as long as the

chance of default with high yield bonds

investor's inflation rate equals the CPI.

yield

"speculative"

bond

is

grade

or

is higher than for other bonds. Their higher credit risk means that "junk" bond

Zero coupon bonds: Zero coupon or strip

yields are higher than bonds of better

bonds are fixed income securities that

credit

have

are created from the cash flows that

demonstrated that portfolios of high

make up a normal bond. Conceptually, a

yield bonds have higher returns than

zero coupon security is just like a

other bond portfolios, suggesting that the

Treasury Bill or "T-Bill". The investor

higher yields more than compensate for

pays something up front in exchange for

their additional default risk

a promise to receive $100 on the

quality.

Studies

maturity date. Inflation linked bonds: An inflationlinked bond is a bond that provides protection

against

inflation.

VALUING BONDS

Most

inflation-linked bonds, the Canadian

The price of bond like any other

"Real Return Bond "(RRB), the British

financial instrument is equal to the

"Inflation-linked Gilt" (ILG) and the

present value of the expected cash flows

new U.S. Treasury "inflation-protected

of that instrument.iii The cash flows, in

turn, depend of a bond depends on the

unlikely). The actual return generated by

size of its coupon payments, the length

a bond held until maturity depends on

of time remaining until the bond matures

the future reinvestment rates at which

and the current level of interest rates.

the coupon payments received are invested.

Present Value: Present value of a bond is the present value of its cash flows

Duration: Duration is a measure of the

(coupons and principal) discounted at a

average

suitable interest rate(s). One convention

maturity of a bond. The value of a bond

used

calculation

will vary depending on the amount of

procedure is to assume a single rate for

the cash flows (coupon size), the timing

all cash flows. This is the known as the

of the cash flows (term to maturity), and

yield-to-maturity.

the interest rate used for discounting.

Yield to maturity (YTM): Yield to

Coupon Interest rate: An interest rate is

maturity is that yield which equates the

the cost of borrowing or the price paid

present value of all the cash flows from a

for the rental of funds. Consequently, a

bond to the price of a bond. It is an

coupon rate is the interest rate that the

iterative (trial and error) calculation that

issuer of the bond promises to pay the

accounts for the reinvestment of the

bond holder. If, for example, the coupon

coupons as well as any capital gain or

rate is 5 percent, the issuer of the bonds

loss on the price of the bond (which will

promises to pay $50 in interest on each

be redeemed by the issuer at par, $100).

bond per year (5% x $1000). Many

Conversely, given the YTM, a price can

bonds pay interest semiannually, the

be calculated. A rise in the YTM will

bond holder would receive $25 per bond

cause the price calculated to decrease,

every six months.iv There are different

while a fall in the YTM will cause the

coupon interest rates on different types

price to rise. Although it does simplify

of bonds depending on their riskiness.

to

simplify

the

(cash-weighted)

term-to-

the calculations, this convention assumes that all the coupons from a bond can be

Market Interest Rate: Bond’s price

reinvested at the same rate (which is

moves in the opposite direction of the

change in market interest rates.v As

traded in the secondary market, the

interest rates rise (fall), the price of a

negotiability of certain others is still a

bond will fall (rise). For an investor who

point of debate and controversy due to

plans to hold a bond to maturity, the

their legal acceptability or compliance

change in the bonds price prior to

with shari‘ah. Therefore, some of these

maturity is not of concern; however, for

bonds can be traded in the secondary

an investor who may have to sell the

market while the trade of others is

bond before the maturity date, an

limited to the primary market because

increase in interest rates after the bond

they can be exchanged only at face

was purchased will mean the realization

value.

of a capital loss. In Malaysia for instance, almost all of the domestic Islamic debt papers issued

ISLAMIC BOND MARKET

so far have been based on the principles Considering the fact that bond issuance

of murabahah, bay‘ bi al-thaman al-ajil,

and trading are important means of

bay’ al-’inah and bay’ al-dayn, despite

investment in the modern economic

the controversy surrounding the issuance

system, Muslim jurists and economists

of tradable bonds in the secondary

are trying to find the Islamic alternative.

market

However, to meet the various demands

contracts. At the same time, there is a

of

and

perceptible increase in the willingness

certificates should be diversified. We

amongst Malaysian issuers of bonds to

have

or

explore other Islamic principles of

musharakah

financing, namely the profit-oriented

bonds, the Ijarah bonds, the istisna‘

based musharakah as well as the asset-

bonds,

the

backed mode of ijarah. Hopefully, the

murabahah bonds. However, it should

future issuance of Islamic bonds will

be noted that although some of these

focus on the widely accepted bonds such

instruments

as musharakah bonds, mudarabah bonds

investors so

Islamic

far

the

mudarabah

muqaradah bonds, the the

salam

have

bonds

bonds

been

and

generally

accepted as being in compliance with Islamic principles so that they can be

based

and ijarah bonds.

on

the

above

two

However, the problem with Malaysian

assume the role of al-mal or property to

Islamic bonds has been the application

qualify as an object of sale. An object of

of bay’ al-’inah and bay’ al-dayn, which

sale in the Islamic law of contract must

is not well accepted by the Middle-

be a property of value. When a bond

eastern investors. The contract of bay’

certificate is supported by an asset as

al-’inah and bay’ al-dayn is seen as

evidenced via the securitization process,

something

based

it is transformed into an object of value

financing. This will certainly pose a

and therefore qualifies to become an

great

Malaysian

object of trade whereby it can be

companies seeking Islamic funds in the

purchased and sold in both the primary

Middle-east via bond issues.

and secondary market. Investors then

similar

challenge

to

to

riba

the

will have to the right to sell (haqq mali)

STEPS

these bonds. In the bay` al-‘inah asset

INVOLVED IN THE BOND

securitization, the financier purchases an

THREE

MAIN

ISSUANCEvi. 1) Securitization 2) Bond Issuance 3) Trading of dept certificates The Creation of a Bay’ al-’ Inah Underlying Asset Asset securitization is the essence of Islamic bond issues, as a bond must

asset from the issuer and sells it back to the same party at a credit price. This buy-back agreement will ensure that the issuer will receive the money in cash while financier will be paid a prefixed or contracted amount in a future date. Debt payments will be made by installment through bond issues. The difference between cash and mark-up price will represent the profit due to the financier.

(1) Sell an asset for deferred price 15 mil

(3) Cash payment 14 mil Creditor

Debtor

(2) Sell the asset 14 mil (4) Pays the creditor 15 mil

(1) Sell an asset in cash 14mil

(2) Cash payment 14 mil Creditor

Debtor (3) Debtor buys back the asset 15 mil

The underlying asset is therefore crucial

asset such as a list including building

in determining the Islamicity of these

and properties.

bonds. In the Malaysian experience these assets

include

factories,

equipment,

stock and inventory and even intangible

Issuance of Islamic Debt Certificate ( Shahdah al-Dayn)

This usually takes place in the primary

The lack of secondary market however

market where in settling its debt, the

should not imply that trading issues is no

issuing

debt

longer significant. This calls the need to

certificates or bonds to investors. As

explain the Islamic view of bond trading

mention above, debt certificates issues

in the secondary market. As mentioned

are valid only when it is supported by an

earlier

asset. In other words, the bonds must be

securitized, it now becomes property

securitized. Here the underlying security

(al-mal) which is also an article of trade.

is the BBA or al-murabahah asset. The

As an article of trade, the bonds can be

underlying asset need not be BBA or al-

sold by investors to the issuer or the

murabahah alone. If the 1st

stage

third party if a secondary market for

involves a contract of Ijarah, then the

Islamic bonds exists. The trading or sale

debt certificate is called Sukuk al-Ijarah.

and purchase of the debt certificates is

If an Istisna’ contract is used, we can

called bay’ al-dayn. In Malaysia, the

called it Sukuk al-istisna’. Islamic bonds

contract is bay’ al dayn at a discount is

new issues can be categorized into two,

acceptable while Middle-east Ulama’

namely bonds issues with coupons and

consider it invalid even though the debt

those with none. The former is known as

is supported by underlying assets. Any

the Islamic coupon bond while the latter

profit created from the sale and purchase

Islamic zero coupon bond.

of a debt is riba.

company

TRADING

will

sell

OF

DEBT

CERTIFICATE DISCOUNTED

BAY’

–

"And whatever riba you give so that it

AL-

may increase in the wealth of the people, it does not increase with Allah." [Ar-

DAYN.

Rum 30:39]

For liquidity purposes, bond trading in the

secondary

when a debt certificate is

market

is

crucial.

However, almost all Islamic bonds today were bought for long-term investments.

Prophet Muhammad (S.A.W) said: “That every loan entailing benefit is usury”vii THE NATURE OF BAY` AL-DAYN

of sale is usually for immediate payment The issue of bay’ al-dayn arises when

or for deferred payment (al Nasi’ah).

the bonds are traded in the secondary market at a discount. We have to note

SALE OF AL DAYN TO A

that buyers in the secondary market are

THIRD PARTY

usually speculators, that those who do not intend to keep the bond for longterm investment purposes. Their main objective is to make quick capital gains on the basis of market liquidity and interest rate movement. However, there is no indication that controversies exist

According to most of Hanafis, Hanbalis and Shafis juristsix, it is not allowed to sell al Dayn to non-debtor or a third party at all. Such opinions are based on the forbidden sale of al Kali Bil al Kali, sale of a Gharar, sale which the seller does not possess.

in the bay’ al-dayn where bonds are sold or redeemed at par value. We may now discuss Bay’ al Dayn to show its nature

Selling al Dayn to a Third Party is Allowed with Conditions

according to Islamic view. According to al-Majallah

As an exception Malikis, Hanafis viii

, Dayn

defines as the thing due i.e the amount of money owed by a certain debtor. So also a sum of money not existing is considered a debt, as also a certain sum of money from things which exist or are

and some Shafi’s jurists allowed selling al-Dayn to a third party. Since the creditor has the right to sell it to the debtor, as well as he has the right to sell it to a third party provided the following rules must be observed:

present, or from a heap of wheat which is present before it is separated from the mass. Al-Dayn can be either monetary, or a commodity, like, food or metal. Based on the aforementioned of alDayn, and the literal meaning of Bay’ al-Dayn we can define it as the sale of payable right either to the debtor himself, or to any third party. This type

a)

The

Dayn

must

be

Mustaqir

(confirmed debt) and the contract must be performed on the spot, not deferred in order to avoid any relationship with the sale of a debt for a debt which is prohibited by Islamic law.

b) The debtor must be a financially

transaction would be tantamount to riba

capable, must accept and recognize the

al-Nasi’ah and is therefore prohibited. It

sale, in order that he will not deny the

is noteworthy that trading in bonds is a

sale. This condition aims to avoid any

subject of dispute on two counts:

dispute between the parties, and the

First, the bonds are normally sold at less

debtor must be easily accessible so that

then their nominal values. Second, the

the creditor knows whether he has the

state or the issuer would use the mode of

capacity to pay his debt or not.

Bay` al-` inah and Bay` al-Dayn and these

both

sales

transactions

are

c) The sale should not be based on

regarded as riba by the majority of

selling gold with silver or opposite,

Muslim scholars. This is the very reason

because, any exchanges between these

for the controversy about the legitimacy

items

of Malaysian Islamic bonds which

necessitates

the

immediate

possession, and if the debt is money, its

renders

it

to

be

unacceptable

by

price in another debt should be equal in

individual Islamic jurists and institutions

terms of amount of quantity.

outside Malaysia and the Middle-Eastern countries. Islam does not allow the legal

Furthermore, the selling of al-dayn must

devices to be treated as a justification for

avoid the occurrence of Riba between

transactions which

the two debts, and must also avoid any

Islam regards unjust and against Islamic

kinds of Gharar which may be raised at

belief. The bonds would have been

the level of inability of the buyer from

acceptable from an Islamic point of view

possessing what he bought, as it is not

if the application of the mode of

permitted that the buyer sells before

financing would be based on the legal

actual receipt of the purchased item.

maxim

It is important to note that Muslim

meaning that no person is allowed to

scholars have unanimously prohibited

invest in a way that generates profit

the trading of debt (bay`

al-dayn) at

without exposing himself to the risk of

anything other than face value. Where

loss. It would expose both parties to the

the price paid for a debt is not the same

outcome of their deal, be it a profit or a

as the face value of that debt, the

of

al-Ghunmu

bil

ghurmix

loss, and thus avoid of usury as matter of

contractor in istisna‘ to enter into a

Islamic principle.

parallel

istisna‘

subcontractor. TYPES OF ISLAMIC BONDS

institution

contract Thus,

may

with

a

a

financial

undertake

the

construction of a facility for a deferred price, and sub contract the actual

IJARAH BONDS

construction to a specialized firmxii. Ijarah is a contract according to which a party

purchases

and

leases

out

MUSHARAKAH BONDS

equipment required by the client for a

Musharakah

bonds

based

rental fee. The duration of the rental and

musharakah

contract

the fee are agreed in advance and

similar to muqaradah bonds. The only

ownership of the asset remains with the

major difference is that the intermediary-

lessor. Hence, the relationship between

party will be a partner of the group of

the parties differs from that of a debtor-

subscribers represented by a body of

creditor relationship since it is based on

musharakah bondholders in a way

buyer-seller of an asset. Ijarah bonds, on

similar to a joint stock company while in

the other hand are securities of equal

mudarabah the capital is only from one

denomination of each issue, representing

party. It should be noted that almost all

physical durable assets that are tied to an

the criteria applied to mudarabah bonds

ijarah contract as defined by shari‘ahxi .

are also applicable to the circulation of

are

on

the

relatively

musharakah bonds.

ISTISNA‘ BONDS Istisna‘

is

a

manufacturable

contract good

to

sell

with

a an

Difference

between

Musharakah

Certificate and a Conventional Bond

undertaking by the seller to present it manufactured from his own material,

MUSHARAKAH

according to specified description and at

CERTIFICATE

a determined price.The suitability of

Represents direct ownership of the

istisna‘ for financial intermediation is

holder in the assets of the project.

based on the permissibility for the

If all the assets of the joint project are in

violated. One such instrument is the

liquid form, the certificate will represent

Muqaradah bond. A Muqarada bond is

a certain proportion of money owned by

an Islamic bond in which no interest is

the project.

earned, but whose market value varies

CONVENTIONAL BOND

with the anticipated or expected profits.

Has nothing to do with the actual

It is the product of Muslim scholars and

business undertaken with the borrowed

thinkers who developed and designed

money.

the financial instrument where interest or

The bond stands for a loan repayable to

similar forms of returns which Islam has

the holder in any case, and mostly with

unequivocally prohibited are excluded.

interest.

The Council of the Islamic Fiqh Academy of Organization of Islamic

MUQARADA

BONDS

ALTERNATIVE

AN FOR

ISLAMIC DEBT BONDS

Countries

(OIC)

during

its

fourth

conference in Jeddah, Saudi Arabia from 18 to 23 Jamadul Akhir 1406H/6 to 11 February 1988, approved the mode of Muqarada by issuing Fatwa after having

The Islamic financial system is a set of

reviewed various studies on Muqarada

rules and regulation that govern the

bonds. The meaning of Muqarada bonds

flows of funds from the surplus-

and its salient features is given in the

spending unit to the deficit-spending

following: Muqarada bonds, as the term

unit. These rules and regulations are

denotes, are based on the conclusion of

strictly governed by Shari’ah principles

lawful “Muqarada” (the mudaraba) with

where there is neither a possibility nor a

capital on one hand and labor on the

need

financial

other, and the shares of profit are

instruments such as the debt related

determined beforehand by a definite

bonds. Hence, the solution for Islamic

proportion of the total. It is called a bond

financial system dilemma lies in the

because it is terminal in nature that its

development of financial instruments in

maturity is determined by the tenure or

which the Shari’ah rulings are not

project completion date.

to

apply

usurious

Growth in MYR Islamic Bond Marketxiii

Potential Growth in USD Islamic Bond Market

CONCLUSION As we have shown, the conventional bond market comprises of primary market and secondary market. The primary bond market is where the bonds are initially issued, while the secondary market where the bonds are resold to other investors. Islamic bonds are also having primary and secondary markets. The main difference, however, is the way the bonds are issued and traded afterwards. In the process of Islamic bond issuance bay’ al-‘Inah is used to securitize the instrument in the primary market, while in the secondary market, bay’ al-Dain is used in order to legalize reselling of the bonds. Such process is mostly used in the Malaysian market, while most of the Middle-Eastern countries do not accept it. The proposed alternative is Islamic bonds based on Muqaradah.

i

Eswe Faerber, All About Bonds and Bond Mutual Funds, Mc Graw Hill, 1993 Ibid. iii Frank J. Fabozzi and T. Dessa Fabozzi, Bond Markets: Analysis and Strategies, Prentice Hall, Inc. 1989 iv Eswe Faerber, All About Bonds and Bond Mutual Funds, Mc Graw Hill, 1993 v Frank J. Fabozzi and T. Dessa Fabozzi, Bond Markets: Analysis and Strategies, Prentice Hall, Inc. 1989 vi Saiful Azhar Rosly & Mahmood M. Sanusi, The Application of Bay’ al-‘inah and Bay’ al-dain in Malaysian Islamic Bonds: An Islamic Analysis, International Journal of Islamic Financial Services Vol. 1 No.2. vii Al-Shirazi, al-Muhadhab, vol. 1, p. 304. viii Majallah al-Ahkam al c Adliyyah, Art. No. 158. ix Al-Zuhili, Bay’ al Dayn in the Shari’ah, pp. 35/6 x Majallah al-Ahkam, Art. 87. xi Monzer Kahf, “The use of Assets Ijarah Bonds for Bridging the Budget Gap”, Islamic Economic Studies, vol. 4, no.2, May 1997, p. 82. xii Muhammad al-Bashir Muhammad al-Amine, The Islamic bonds market: possibilities and challenges ii

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