A Jurisprudential Review of Extendible Islamic Securities (with Emphasis on Participation Bonds, Leases, Morabehah, Exile and Islamic Treasury Documents)

In long and midterm maturity securities, mismatched nominal interest rate and required rate of return impose interest rate risk on investors and issuers. If long term and midterm expected interest rates are downward, fixing interest rate of securities higher than the expected rate would cause the attractiveness of securities for investors and losses for originators. The opposite of this point is also true. Thus for decreasing the interest rate risk, maturity or interest rate of securities should be adjusted. One solution to the decrease of interest rate risk for both parties is issuance of short term securities with embedded extendible option. In other words, this solution provides some insurance for the interest rate in a determined time. In this paper, with analytical – descriptive method, this extendible security has been introduced and the specific risks and jurisprudential aspects of this kind of sukuk are explained. Jurisprudential aspects of five types of Islamic securities including musharaka, ijarah, murabaha, parallel salaf Sukuk and Islamic Treasury Bill have been investigated. The results show that because of their debt nature, extending the maturity for murabahah Sukuk and Islamic Treasury Bill is not permitted, whereas that of musharakah, ijarah and parallel Salaf Sukuk is permitted.