RAM Ratings in Malaysia has a fantastic overview (registration required) of the Sukuk al-Amanah Li al-Istithmar (ALIM) that was issued recently by Cagamas (the national mortgage corporation) working with Al Rajhi Bank. The sukuk structure is unique in Malaysia in that it was specifically created to be acceptable under Shari'ah standards in both Malaysia and the GCC. It is also the first I have seen that uses an auction to redeem the sukuk certificates rather than a wa'ad (purchase undertaking), which is used in most other cases. The AAOIFI rules that prohibited purchase undertakings at par for mudaraba and musharaka sukuk limited the issuance of those types of sukuk in the intervening two years.
The Sukuk ALIM structure is very similar to the sukuk al-istithmar structure used by the Islamic Development Bank. The sukuk certificates are issued and are used to purchase a basket of contracts. In the case of the sukuk ALIM, the SPV purchases home finance contracts (ijara and 'debt-based' like murabaha). The portfolio of contracts are set up so that there are more than 50% in the ijara contracts where ownership of the underlying asset is transferred to sukuk investors. AAOIFI rules require that at least 33% of contracts transfer real ownership of an asset (rather than just ownership of a receivable) in order for the contracts to be tradable. The Islamic Development Bank's first istithmar sukuk used this threshold, but subsequent sukuk raised the level to 50%.
Any cash remaining that is not used to purchase assets (either ijara or debt-based) is invested in commodity murabaha transactions with Cagamas through the Bursa Suq al-Sila' platform (with Al Rajhi as the commodity agent). This essentially provides income on surplus cash for the sukuk investors.
The redemption of the sukuk is also unique. Instead of a wa'ad (purchase undertaking), the assets held by investors are auctioned to third parties or Cagamas with a minimum acceptable bid of the principal and final profit payment. This has the benefit for investors that if the auction is conducted at a time when the assets value is higher than par, the investors could receive a higher redemption value than if it were a bond. They are not likely to face a loss. If there are no outside bids for the assets, Cagamas can also bid on the assets and would likely make a bid of at least the minimum amount (Cagamas' largest shareholder, with 20%, is the Malaysian Central Bank, Bank Negara). This is reflected in the credit rating on the sukuk, which is the same as Cagamas' other unsecured debt.
The auction method is interesting because it provides a way to make the final redemption price based on the market value of the assets at maturity. However, it is not really a risk-sharing arrangement because there is limited potential for loss if the asset value falls because Cagamas will be unlikely (at least as unlikely as for the sovereign) to withhold a minimum offer on the assets at maturity. However, that is generally the current state of sukuk; they will incorporate limited profit-sharing, but not to the point at which the sukuk has risks that differ from an unsecured bond.
The sukuk ALIM does add a new dimension into the sukuk market because of the incorporation of an auction and there may be additional potential for this to become more widely used--particularly in securitizations. However, it is unlikely to become universally used because many sukuk are issued using an asset that the issuer would not want to part with if its value rose during the term of the sukuk issued. A business that used its headquarter building is unlikely to want to risk having to pay more than the face value of the sukuk in order to maintain owenership of its headquarters. In those cases it is likely that the purchase undertaking (which is permitted in an ijara sukuk) is likely to remain common in many situations. However, it will be interesting to see how the sukuk ALIM is received in the market and how it performs when the first redemption occurs.