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Lease Certificate (Sukuk)

A lease certificate is a capital market instrument, economically similar to a bond, that gives investors a share of the income from an asset or right and is issued in line with interest-free finance principles. Under the CMB’s Communiqué on Lease Certificates (III-61.1), lease certificates are issued through asset leasing companies.
Contents
  1. 1.Key points
  2. 2.How it works
  3. 3.Interpretation
  4. 4.Pitfalls
  5. 5.Official sources
  6. 6.Frequently asked questions

Key Points

  • The communiqué defines ownership-based, management-contract-based, purchase-and-sale-based, partnership-based and work-contract-based types.
  • Lease certificates are the core fixed-income instrument for participation funds and investors who follow interest-free finance principles.
  • repayment depends on the originator; assess credit risk separately for private issues.

How It Works

the asset leasing company takes over an asset or right from the originator, leases or operates it and distributes the income to investors periodically. At maturity the asset is sold back to the originator and the principal is repaid.

Interpretation

The Treasury also issues lease certificates in lira and foreign currency.

Lease certificates are the core fixed-income instrument for participation funds and investors who follow interest-free finance principles. Economically they are sensitive to rate and credit risk much like bonds.

Pitfalls

repayment depends on the originator; assess credit risk separately for private issues. Market liquidity can be low. Returns differ by certificate type, so read the prospectus.

Official Sources

Official regulation and sources the definition is based on.

Pages Where This Term Appears

Related Terms

Frequently Asked Questions

A lease certificate is a capital market instrument, economically similar to a bond, that gives investors a share of the income from an asset or right and is issued in line with interest-free finance principles.

the asset leasing company takes over an asset or right from the originator, leases or operates it and distributes the income to investors periodically. At maturity the asset is sold back to the originator and the principal is repaid.

Prepared by: Yatırımcı.AI Research TeamLast reviewed: Method: MethodologyEditorial policy