The sukuk model is effectively a derivation of the conventional securitization process where a special purpose vehicle acquires control of the originator's real assets and issues financial claims on the associated cash flows.

Islamic bonds or `sukuk' have generated considerable interest in international capital markets. Sukuk are a type of financial certificate comparable to conventional asset-backed securities that provide investors with ownership in a specified underlying real asset found on the balance sheet of the issuing company. The sukuk model is effectively a derivation of the conventional securitization process where a special purpose vehicle acquires control of the originator's real assets and issues financial claims on the associated cash flows. Investors receive a `profit rate' based on the revenue streams of the underlying asset instead of traditional interest payments. Such a structure qualitatively enhances the security of the investment and reduces a typical investor's risk exposure. International investors have the added benefits of portfolio diversification. With returns normally benchmarked against the London Inter-Bank Offered Rate sukuk are priced competitively against other financial products floated in developed and emerging markets.

Indeed the key selling feature of an Islamic sukuk is its involvement in the funding and/or production of real assets. Under a Sukuk-Al-Murabaha structure commodities are initially purchased and then resold to the specified client at a mark-up with temporary ownership used as justification. Sukuk-Salams are similar to Murabahas with the exception that investors entering into the contract pay for delivery of the underlying asset at contract initiation. Sukuk-Al Istisna'a structures are based on pre-production payments used to finance the manufacturing capacity of the issuing company while Sukuk-Al Ijara involves the leasing of real assets rationalizing the payment of rent to the owner. Sukuk-Al Musharakah is structured when both issuer and lenders participate in a joint business venture necessitating investment in tangible assets and profits shared at an agreed upon ratio. Sukuk Al-Mudarabah is structured slightly differently where investors lend funds to a mudarib (or entrepreneur) who undertakes to invest these proceeds in real assets and shares a percentage of the profits generated.

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