Islamic Finance – Islamic Capital Market - Floating or fixed rent payments
The Sukuk Ijarah's structure allows for either a set or floating rental payment based on a benchmark that is updated prior to the start of a new rental period. Rental will be updated every six months in accordance with the London Interest Based Selling Rate for the Malaysian Global Sukuk Ijarah (LIBOR). As long as the lessee and the lessor consented to this benchmark before signing the lease agreement, it is acceptable according to Shari'ah principles. Despite the benchmark's conventional nature, the structure is still legitimate because it has no dealings with interests. The benchmark serves as simply a point of comparison when determining the fund's cost, which will serve as the foundation for the new rental. The framework contains neither payments nor interest charges.
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