Nomura Holdings Inc., a leading financial services group based in Tokyo, Japan, appointed Kuwait Finance House (Malaysia) Berhad as the lead arranger for its issuance of a two-year ijarah sukuk of USD 100 million on 7 July 2010. The issuance marked the first international, USD-denominated, corporate sukuk (ijarah sukuk) issuance by a Japanese multinational corporation issued out of Malaysia under the countrys Framework of Issuance of Foreign Currency-Denominated Bonds and Sukuk.

With this landmark transaction, Nomura aimed to diversify its funding sources to drive growth and tap into the growing Islamic finance market. It targeted investors from jurisdictions such as the Asia Pacific, the Middle East and London. With the companys worldwide operations in more than 30 countries, it also sought to reach out to its customer base to benefit its clients and partners. While the transaction was highly significant to the company, it also led the way for other Japanese corporations to follow suit in their endeavours to tap into the Islamic finance market. Nomura ijarah sukuk was a highly flexible Shariah-compliant sukuk structure. The underlying physical assets of the sukuk were two aircrafts, and the transaction involved the transfer of legal ownership of the underlying assets to the sukuk holders.

1. Briefly define ijarah sukuk and highlight its main features as well as the requisites to be prepared for the issuance of this type of sukuk structure?(10 marks)
2. Based on the scenario, discuss the potential benefits that Nomura Holdings Inc. could achieve by adopting the ijarah sukuk structure.(10 marks)