Issuing Sukuk at a discount: A Shariah concern or not?
March 15, 2023
It is normal when conventional debt capital bankers interact with Sukuk issuers, but we might end up, unintentionally, introducing new practices that may pose a POTENTIAL Shariah risk. We all know what we call a practice of borrowing at US$95 and repaying at US$100 (after one year). What if an issuer decides to issue Sukuk at a discount (say the price at issue is US$98.77)? Note this is not a Tap.
The question is, what would the principal amount be at maturity? There will be no Shariah issue if the principal amount is US$98.77 (at maturity), right? But what if it is not? Say US$100 instead. How would the Shariah scholars categorize such a practice?
This is keeping in mind that we are not talking about the profit amount for the aforementioned example, but...