The Arabic term for the trading of debt is bay al-dayn. The majority of scholars in the Middle East consider the trading of debt to be similar as trading of money. In general, this means that a debt can only be transferred at face value and not traded at market value, as many conventional bonds are.
Exceptions of the rule
First, pooling of assets with a minimum of 51% in tangible assets where trading at values other than par are permitted (e.g. ijara financing) alongside a maximum of 49% of what is considered debt, like murabaha, is widely accepted. Any change of value is considered to be a change of value of the tangible assets inside the pool. This compromise is generally based on the need to encourage secondary markets and may not be extended and accepted in the future. These sukuk are one form of hybrid sukuk. A recent example of this type of hybrid sukuk was the one issued by the Islamic Development Bank for $850 million in 2009 as a part of its $1.5 billion sukuk program.
A legal trick (hiyal) could take advantage of this rule where a debt certificate is exchanged for a commodity, which in turn could be sold at market value. In general, such a circumvention would be prohibited by Shari'ah scholars.
View in Malaysia
Shari'ah scholars in Malaysia do have a different view on debt trading, which they consider as permissible if the debt is originated out of an asset finance transaction. Such a debt could be traded at market value while a debt based on loan could also be only traded at face value. This distinction is not accepted in the Middle East and products based on these technique are limited to the the Malaysian market.
- An Analysis of the Classical and Contemporary Juristic Opinions on Bay al-Dayn (pdf) by Hanudin Amina
- The Application of Bay al-inah and bay al-dayn in Malayisan Islamic bonds: An Islamic Analysis (pdf) by Saiful Azhar Rosly & Mahmood M. Sanusi
- "Gulf sukuk pick up as IDB issues, TDIC mandates," Reuters, September 9, 2009.