Islamic Private Debt Securities

Definition of "Islamic Private Debt Securities"

A financial instrument introduced by Malaysia in 1990 when a deferred sale facility amounting to RM 125 million was syndicated by the Bank Islam Malaysia Berhad (BIMB) for a multinational company. Under this facility, the BIMB arranged a group of financiers who purchased certain assets from the issuer amounting to RM 125 million. These assets were then sold back to the issuer at a mark-up price representing the cost plus a pre-determined profit. The payment was deferred so it became a debt. The company issued a series of promissory notes to the syndicate participants with amounts and maturities dates according to repayment schedules of the debt. The notes became tradable at the stock exchange.