Types of Sukuk (Islamic Bonds) and History of Japanese Company Issuance

Abstract

Sukuk issues by Japanese companies are still few. Aeon Credit Service Malaysia became the first Japanese company to issue sukuk in 2007, and Toyota Financial Services’ Malaysian subsidiary, UMW Toyota Capital (UMWTC, now called Toyota Capital Malaysia) was next with an issuance in 2008. Both used a musharaka scheme. Nomura Holdings issued an ijarah sukuk backed by aircraft leases in 2010 and more recently, in September 2014, The Bank of Tokyo-Mitsubishi UFJ Malaysia issued the world’s first yen-denominated sukuk.

In this paper we introduce the most basic sukuk structures and some differences between the Malaysian and Middle Eastern markets. We then analyze the structures of Japanese sukuk and the issuers’ intent of tapping into the Islamic bond market.

Keywords: sukuk, Islamic bond, Japan, Islamic finance, Toyota, Aeon, Nomura, The Bank of Tokyo-Mitsubishi UFJ, BTMU

JEL Classification: D92, E41, E44, F21, F23, G14, G15, G32, L21, Z1