Islamic finance is no longer a niche of the Gulf. Sukuk are a permanent part of sovereign, quasi-sovereign and corporate funding across the GCC, Malaysia and increasingly North Africa, and Sharia-compliant liquidity is often the deepest pool available to a MENA issuer. Investors who hold that liquidity are mandated to buy only compliant paper. An issuer, bank or fund that cannot offer a credible Sharia-compliant instrument is excluded from part of its natural investor base and pays for it in price and tenor.
In Lebanon, Islamic banking has remained marginal for reasons of regulation rather than demand, and the absence of a domestic debt market has kept sukuk out of reach. As the country rebuilds its financial system, and as Lebanese and regional companies look to Gulf capital, Sharia-compliant structures offer a route to investors who do not buy conventional debt, and a natural fit for asset-based and partnership finance where collateral and trust are scarce.
Orion structures Islamic instruments with the same discipline it applies to conventional ones. Dr. Ghassan Chammas has advised the boards of several Islamic banks on product innovation, corporate governance and risk management, and brings senior rating-agency experience and expertise in the rating and scoring of Islamic banks and sukuk. The aim is a structure that the Sharia board will approve, that lawyers and tax advisers can document, that a rating agency can analyse and that investors will buy.
A sukuk issue or a new Islamic product follows a sequence in which Sharia, legal, credit and investor questions are resolved together, not one after another. The stages below reflect international market practice; timings are indicative and depend on the jurisdiction and the structure.
The stages below describe a typical mandate and reflect best practice in the market. Every engagement is scoped to the case at hand: stages may be combined, re-ordered, shortened or omitted, and timings depend on the company, its counterparties and the regulatory setting.
Establish what the client needs to fund and whether its assets, cash flows and investors support a Sharia-compliant structure.
Work begins with the purpose of the financing and the balance sheet that must carry it. We inventory the assets that could underlie a structure: real estate, equipment, receivables, inventory or a business line, and test their ownership, encumbrances and transferability. We map the cash flows that will service the instrument and identify the investor base, from Islamic banks and takaful operators to Sharia-screened funds. For a bank or corporate developing a product rather than an issue, we assess client demand, regulatory treatment and operational capacity. The common pitfall this avoids is choosing a structure first and discovering later that the assets do not exist, are pledged, or cannot legally be transferred.
Select the contract, or combination of contracts, that best matches the client's assets, risk appetite and investors.
Each structure allocates risk differently. Ijara suits issuers with tangible, leasable assets and gives investors a predictable rental return. Murabaha fits trade and working-capital needs but is constrained in secondary trading. Musharaka and mudaraba share profit and loss and suit project or growth financing where investors accept equity-like risk. Wakala allows a mixed pool of assets managed by an agent, and hybrid structures combine contracts to overcome a shortage of tangible assets. We compare options on Sharia acceptability, cost, tenor, tradability and rating impact. The pitfall avoided is defaulting to the familiar contract when another would be cheaper, more tradable or more acceptable to the target investors.
Secure the Sharia board's approval of the structure, the documentation and the operating mechanics.
We help the client appoint a Sharia board or engage an established Sharia advisory firm whose scholars are recognised by the target investors. The structure is presented early, in a form scholars can test, and refined with them rather than submitted as a finished design. Reference is made to AAOIFI Sharia standards and to IFSB guidance on governance where relevant to the jurisdiction. The fatwa, or pronouncement, covers the transaction documents as they are finalised, not only the concept. The pitfall avoided is a late objection, often on asset ownership, purchase undertakings or late-payment treatment, that forces documentation to be reopened after the timetable is set.
Identify, value and transfer the underlying assets to a special-purpose vehicle that holds them for investors.
Sukuk represent ownership of assets or rights, so the underlying assets must be specifically identified, valued and, depending on the structure, transferred in ownership or beneficial interest. We coordinate the incorporation of the issuing vehicle, usually a bankruptcy-remote SPV acting as trustee for the certificate-holders, and the transfer mechanics: sale, lease-back, service agency and purchase undertakings. We document clearly what investors can claim on default. The pitfall avoided is a gap between the stated and the actual asset position, which unsettles scholars, rating analysts and investors alike.
Produce a complete documentation set that is enforceable, tax-efficient and consistent with the fatwa.
The documentation of a sukuk is more extensive than that of a conventional bond: a declaration of trust, purchase and lease or service agreements, agency and undertaking deeds, and an offering document. We coordinate legal counsel in each relevant jurisdiction and test the structure against local tax rules, since asset transfers can trigger registration fees, transfer taxes or VAT that conventional debt does not. Accounting treatment is reviewed under IFRS and, where applicable, AAOIFI accounting standards. The pitfall avoided is a structure that is Sharia-compliant on paper but costly in stamp duties or unenforceable in the courts that would hear a dispute.
Present a credit and a structure that rating agencies can analyse and investors can price.
Where a rating is needed, we prepare the issuer for the agency's process: the credit story, the financial model and the explanation of how the sukuk structure links investor recovery to the issuer's credit or to the assets. Most sukuk are rated on the issuer's credit, because purchase undertakings make them economically similar to senior debt, and the analysis must reflect that. For the investor case, we prepare the presentation, the questions Sharia-screened funds and Islamic banks will ask, and the roadshow material. The pitfall avoided is an issuer that understands its business but cannot explain why the structure protects investors.
Price, allocate and close the issue, or launch the product, with every condition precedent satisfied.
For a public or private sukuk, we work with the arrangers on the bookbuilding, pricing and allocation, and on the closing checklist: signed documents, the final fatwa, legal opinions, asset transfers, listing where relevant and settlement. For a bank or corporate product, the equivalent is the launch: approved policies, systems configured to the contract's mechanics, staff trained, and client documents issued. The pitfall avoided is a closing delayed by a single outstanding item, typically an asset registration or a missing Sharia sign-off, that could have been anticipated weeks earlier.
Keep the instrument compliant through its life and report to investors, regulators and the Sharia board.
Compliance does not end at closing. The underlying assets must remain in existence and in use, rentals and profit distributions must follow the documented mechanics, and any non-compliant income must be identified and purified. We help set up the internal Sharia review and the periodic external Sharia audit, the reporting to certificate-holders and the regulator, and the rating surveillance. The pitfall avoided is a structure that drifts: assets sold or impaired without replacement, or payments made outside the agreed mechanics, which can expose the issuer to a compliance event.
A Sharia-compliant instrument must reflect real assets, real ownership and real risk-sharing where the contract requires it. Structures that replicate a conventional loan with a thin layer of contracts are increasingly challenged by scholars, regulators and investors. We start from the economic substance and choose the contract that expresses it, not the reverse.
The Sharia board is a decision-maker, not a final approval to obtain. Presenting the structure early, with its open questions, saves weeks and avoids redrafting. We select scholars whose opinions the target investors respect, and record how each point is resolved.
Sharia, legal, tax, rating and investor work depend on one another: a change to the asset transfer alters the fatwa, the tax analysis and the rating view. We run them on a single plan so that a decision in one is reflected immediately in the others.
Compliance should be verifiable throughout the life of the instrument. The Orion Scoring & Rating platform includes a Sharia-compliance module that scores companies against Islamic screening criteria, and we bring the same measurable approach to asset monitoring, purification and reporting.
Asset schedules, financial models and Sharia deliberations are commercially sensitive. Every Orion mandate is conducted under strict confidentiality: information is shared with scholars, counsel, rating agencies and investors only to the extent each needs it, and nothing about a mandate is disclosed afterwards.
Every Orion mandate is conducted under a strict non-disclosure agreement. We do not publish client names, transactions or outcomes, and we never use a client as a reference without written consent. What we can share openly is how we work — and the research on which our advice rests.
A first conversation with a partner is confidential and without commitment.
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