Timmy Elsewhere

The Business.

Those sharia bonds and a creeping privatisation of the NHS?

4 thoughts on “Timmy Elsewhere”

  1. Sharia bonds:
    buildings or a piece of infrastructure” would be switched to a “special-purpose vehicle” set up to administer the bond…

    When the sukuk matured, the Government would guarantee to buy back the asset, allowing the bond-holders to get redemption payments.

    Does the buy back occur at market price or at the original sale price? i.e. if I understand bonds correctly, a £1000 bond may fluctuate in value during its lifetime, but will always be redeemed at £1000. Does the same apply to a sukuk?

    During the term of the sukuk, who is the legal owner? i.e. who is responsible for maintaining the condition of the asset? Who gets a say in the use of the asset?

    Also, is the sukuk holder forced to sell the asset back? Or can they say to the government “no, keep your money, we like owning this bridge”? 🙂

  2. “When the sukuk matured, the Government would guarantee to buy back the asset, allowing the bond-holders to get redemption payments.

    The simplest way to describe that is a mortgage, another is a sale and leaseback, with a guarantee to repurchase at the end.”

    Then why not call it a sale & leaseback without all the funny foreign words?
    I may have trouble breathing through my nose at times but I can smell a rat when it presents itself. Remember that sharia law isn’t common law. It isn’t precedent & case law. Sharia’s whatever some guy in a beard says it is. What happens if he says it something different at the end of the period to what he was saying at the start?

  3. I don’t have any problem with inventing financial products that open out the customer base. The pensions law was redrafted to allow Quakers to draw down income rather than buy annuities, and this option is open to anyone. Similarly with these new bonds.

    Don’t see why they need to have Arabic names, though. What indeed is wrong with calling them sale and leaseback warrants?

    Tim adds: Not the Quakers: Plymouth Brethren.

    http://commentisfree.guardian.co.uk/daniel_davies/2006/08/did_i_ever_tell_you_i_was_one.html

    But yes, I’ve no problem with casting the net wider in the search fo cash.

  4. But yes, I’ve no problem with casting the net wider in the search fo cash

    Given recent history, it would be better if the government stopped borrowing – they have more than enough debt as it is.

    What indeed is wrong with calling them sale and leaseback warrants?

    I would still be interested to know what authority the new owner gets over the underlying asset. How long until this lot uses our remaining military assets as collateral? Having used 1984 as their textbook for government so far, are they going to switch to Catch-22?

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