An Muslim bond ( sukuk ) has economic features similar to those of a conventional bond, but is structured so as to be compliant with Sharia’a jurisprudence and can be sold to Islamic investors who are prohibited, by Sharia’a, jurisprudence from puting in conventional debt securities.
QSC purchased a certain land package from the Government of the State of Qatar. The land package was leased by QGS to the Government of the State of Qatar for a 7-year period matching to the continuance of the trust certifications. QSC declared that it would keep these assets in trust for the holders of the trust certifications. The rental rental payment from the Government of the State of Qatar to QGS will precisely fit the periodic distribution payments collectible on the trust certifications. The rental rental payment was calculated based on 6-month US dollar LIBOR plus a border.
This instance describes the Qatar Global Sukuk rated trust certifications ( Sukuk ) , the returns of which will finally be used for general support intents by the Government of the State of Qatar. The principle for this dealing is to let the Government of the State of Qatar to raise Sharia’a compliant financess.
The instance draws extensively on the offering handbill which is summarised for the reader.
Content Background to the Sukuk The Offer Summary of the Offer Summary of The Certificates The Trust Assets and the Master Ijara Agreement Investing considerations Case survey inquiries Background to the Qatar Global Sukuk QSC Katar Location, Area and Historical Background Qatar is an independent province in the Southern Arabian Gulf holding a land boundary line with Saudi Arabia and nautical boundaries with Saudi Arabia, Bahrain, the United Arab Emirates and Iran.
The state extends over a peninsula about 185 kilometers long and between 55 to 100 kilometers broad and covers a entire country of 11,521 square kilometers, including a figure of islands. Doha is Qatar ‘s capital metropolis, the place of the Government and the state ‘s cultural, commercial and fiscal Centre. It is besides the location of Qatar ‘s chief port and the international airdrome.
Qatar has an waterless desert clime with low one-year rainfall and small flora or surface H2O.
Qatar has huge hydrocarbons resources within its district with both onshore and offshore oil Fieldss and the 3rd largest proven natural gas militias in the universe. This includes the North Field, the universe ‘s largest individual non-associated gas sedimentation in the universe.
Historically, the peninsula was inhabited by mobile folks, coming under the influence of several major Middle Eastern civilizations, including the Dilmun civilization, in 4,000-2,000 B.C. , the Umayadd and Abassid Caliphates ( 8th-13th centuries ) and the Ottoman Empire. In the sixteenth century, the Qatari peninsula came under the influence of, foremost, the Portuguese, and so the British. In 1916, the British concluded a pact with the governing al-Thani household under which Qatar became a British associated state. It remained so until September 1971 when the state declared independency. Qatar ‘s crude oil resources have led to rapid development and the building of a modern substructure.
Government Organisation and Political Background Qatar is an absolute monarchy and has been ruled by the al-Thani household since the 19th century. In 1916, the al-Thanis entered into a pact with the British pursuant to which Qatar became a British associated state. Qatar declared independency on 3 September 1971. The current Emir, His Highness Sheikh Hamad bin Khalifa al-Thani, replaced his male parent as Emir and assumed his place on 27 June 1995. The Emir is the chief executive officer in Qatar, although the cabinet, appointed by the Emir, carries out the daily disposal of the state ‘s personal businesss.
Legal System and Enforceability of Opinions The bench in Qatar is divided into two separate systems. The Civil and Commercial tribunals and the Sharia’a tribunals. Each system has its ain Court of Appeal, which is the highest tribunal for each system. Judges are appointed by a edict of the Emir on the recommendation of the Minister of Justice or Minister for Endowments and Religious Affairs.
Any difference relating to the Sukuk Certificates adjudicated in Qatar would be initiated in the civil and commercial tribunals which, harmonizing to present Qatari jurisprudence, have legal power over commercial differences. The Government is capable to accommodate under the civil and commercial codification of Qatar with regard to commercial minutess entered into by the Government, its ministries and sections.
Under the civil and commercial codification, contractual commissariats for the charging and payment of involvement are allowable and enforceable in conformity with their footings, although a tribunal using Qatari jurisprudence may non implement such a proviso to the extent that such proviso provided for the payment of compound involvement. Due to the fact that there is no philosophy of adhering case in point in Qatar, the future attitude of the Qatari tribunals and Qatari jurisprudence, sing the payment and reception of involvement, and other affairs can non be predicted.
The economic system of Qatar ( at the clip of the Sukuk issue ) Qatar has a strong economic system dominated by oil and gas export grosss. Since the find of oil in Qatar in 1939, the state ‘s economic public presentation has mostly mirrored the fluctuations in oil monetary values in the international market. In the old ages of low oil monetary values. Qatar has witnessed important budget shortages, and when international oil monetary values have boomed, there have been marked budget excesss.
In 2002 the part of the oil and gas sector to nominal GDP was 59 per cent. Due to the economic system ‘s exposure to oil monetary value motions every bit good as the finite nature of oil militias, the Government has pursued a policy of economic variegation in advancing the development of energy-intensive heavy industries utilizing natural gas as fuel and promoting the engagement of private endeavors in the industry. At the same clip, the Government has privatised a figure of services to cut down force per unit area on the budget. Qatar is besides developing a modern substructure to ease and supply a model for future development.
Qatar ‘s natural gas resources, estimated to be 900 trillion three-dimensional pess, rank in size behind merely those of Russia. Qatar ‘s extended North Field natural gas militias contain the bulk of these militias and history for an estimated 5 per cent, of entire proved worldwide natural gas militias. The Government predicts that by 2008 the grosss of the export of LNG will transcend those of the export of oil without any cut in rough oil production degrees.
Qatar ‘s current economic stableness was reflected in the ascent by Standard & A ; Poor ‘s to Qatar, in July 2003, of Qatar ‘s recognition evaluation to A+ .
Gross Domestic Product The chief constituent of GDP for the period 1998 -2003 was the oil and gas sector, the estimated value of which amounted to US $ 10.3 billion in 2002, stand foring about 59 per cent, of nominal GDP for that twelvemonth. In the non-oil sector, the finance, insurance and existent estate sector is estimated to hold accounted for US $ 1.3 billion in 2002, stand foring about 7.5 per cent, of nominal GDP in that twelvemonth. Grosss from the fabrication sector are estimated to hold reached US $ 989 million in 2002, stand foring about 5.7 per cent, of nominal GDP in that twelvemonth.
Qatar ‘s GDP has grown over the past five old ages in a form that mostly follows the fluctuations of international oil monetary values and the increased gross revenues of Liquefied Natural Gas ( LNG ) , with growing averaging 13.9 per cent between 2000 and 2002. The important decreases in universe oil monetary values and degrees of petroleum oil production in 1998 resulted in a contraction in Qatar ‘s economic system in that twelvemonth, while a significant addition in the monetary value of oil contributed to an improved GDP in 1999. In 2000, as oil monetary values reached a ten-year high and about doubled in footings of value, nominal GDP grew by 45.5 per cent, to US $ 17.6 billion.
In 2001, when oil monetary values and production degrees fell, nominal GDP saw a autumn of 3.6 per cent. In 2002 there was a modest recoil of 2 per cent, to US $ 17.4 billion. Harmonizing to the Qatar Central Bank estimations, nominal GDP grew by 5.3 per cent. to US $ 4.9 billion at the terminal of the first one-fourth of 2003, compared to US $ 4.7 billion at the terminal of the last one-fourth of 2002. This addition mostly reflected the rise in universe oil monetary values due to the war in Iraq and break of South American oil industries.