- This is a treasury facility equivalent to a ‘government treasury bill,’ but compliant to Sharia’h principles managed by the Central Bank of Bahrain.
- A Special Purpose Vehicle (SPV) will initially issue Sukuk al-Salam to International Financial Institutions (IFI’s), which are looking for short- term investments. The Sukuk are subscribed to on a cash basis to form the capital/purchase price for the salam commodity.
- The Sukuk al-Salam represents the rights of investors/salam purchasers. IFI’s receive the salam commodity for example after two months pursuant to the execution of the salam contract. (Pay now, receive the commodities at an agreed upon date in the future).
- To mitigate the risk to the investors/IFI’s (market risk) and to effect the fixed income feature of the ‘government treasury bill,’ a third party who is the ultimate commodity purchaser will undertake under wa’d* principle to purchase the salam commodity from the investors…
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