Juridical-Financial Feasibility Study of Inflation-Protected Musharakah Sukuk

Abstract

This Article by applying descriptive- analytical method answers the following questions: Based on Imamiyah juridical school, is it possible to issue floating-rate and inflation-protected musharakah sukuk? What are the correcting solutions consistent with finance knowledge? The results of the study show that it is possible to issue inflation-protected musharakah sukuk with floating provisional rate. In order to float the rate of return, difficult solutions may be offered such as floating provisional rate with call option and floating provisional rate with call and put option. In recent years, inflation-protected bonds have developed in the world and have been invested in most of portfolios. The goal of these bonds is to ensure purchasing power by directly linking returns to inflation for the bonds' entire term. Linkers, therefore, contain two forms of payment: the real interest that is fixed at the beginning of the term, and compensation for the loss of purchasing power. Thus, the asset class presents an ideal opportunity to a broad range of investors for protection against inflation. Iran as a country that has high and variable inflation can use these securities for financing long and mid-term projects, especially in public construction projects.

Keywords

• inflation-linked securities
• musharakah contract inflation-protected musharakah sukuk
• real interest rate
• inflation expectation
• nominal interest rate