Islamic Finance Daily Brief — Friday, October 16, 2026
Assalamu alaikum! Today's Islamic finance stories — and what to learn from them.
Today's stories
🇯🇴 Amman to issue Jordan's first municipal sukuk
Amman is about to borrow JD400 million (about $564 million) without interest. Jordan's Cabinet approved the Greater Amman Municipality issuing the country's first-ever municipal sukuk on Oct 11. It is a five-year deal paying 5.5% a year, structured as a lease-to-own agreement. The city says replacing its expensive conventional loans with this sukuk could save up to JD140 million.
What to learn: A municipal sukuk is a sukuk issued by a city government. A regular sukuk is usually issued by a company raising money for its business, or by a national government. The difference is the issuer and the purpose. Amman is borrowing to fund city services like roads and water, and to refinance its old loans.
Amman is doing this to pay less for its debt. The city holds old conventional loans at high interest rates. This sukuk replaces some of that debt at 5.5% a year, which is JD22 million annually on JD400 million. The gap between the old cost and the new one is the saving: about JD70 million over five years, or JD140 million (roughly $197 million) if the arrangement runs ten years.
The way it borrows without interest is ijara muntahia bittamleek: a lease that ends with ownership. The dedicated company buys assets and leases them to the municipality. The municipality pays rent, and part of each payment buys the assets over time. After five years, the municipality owns them outright. Investors earn their 5.5% from those rental payments. Today's Learn section explains ijara in plain terms.
The lease needs someone to hold the assets, and that is the dedicated company. It is a special-purpose vehicle: a separate legal company created for one job, holding the assets and issuing the sukuk. The municipality formed it under Jordan's Islamic Finance Sukuk Law. Any issuer can set one up. It must be a genuinely separate company with its own accounts, so the investors' assets stay apart from the issuer's other debts.
The first sale targets banks, insurance companies, and pension funds. The certificates will also list and trade on the Amman Stock Exchange, so anyone with a brokerage account can buy and sell them on the open market.
🇴🇲 Oman's OQEP sets up a $2 billion sukuk programme
Oman's listed oil and gas producer has given itself a $2 billion Islamic borrowing facility. OQ Exploration and Production disclosed the sukuk programme to the Muscat Stock Exchange on Oct 14. Nothing has been sold yet. The programme gives OQEP the option to borrow later, in tranches, whenever market conditions suit.
What to learn: A programme like this needs several approvals before a single certificate is sold. OQEP's board must sign off. The Muscat Stock Exchange must accept the disclosure. S&P must assign its rating. If OQEP lists in London, the London Stock Exchange must approve the listing. And a Shariah board must certify that the whole structure complies with Islamic law.
S&P Global Ratings is a credit rating agency. It studies borrowers and grades how likely they are to repay. The three big agencies are S&P, Moody's, and Fitch. Fund managers use their grades to decide what they are allowed to buy.
BBB- is S&P's lowest investment-grade rating. Investment grade means the borrower is considered safe enough for conservative money. One step below, at BB+, the paper becomes speculative, and many pension funds and insurers are not allowed to buy it. OQEP wants the BBB- stamp because it opens the door to those big institutional buyers. For a pension fund manager deciding where to park retirees' money, that rating is the green light.
The best time to sell is when borrowing is cheap and demand is strong. Issuers watch the yield on US Treasury bonds, which sets the base price for dollar debt. They watch the order books on similar recent sukuk: heavy oversubscription means investors are hungry. For an oil producer like OQEP, a stable or rising oil price helps too, because it reassures buyers the company will earn enough to pay them back.
The London Stock Exchange's International Securities Market is built for international issuers and professional investors. Buyers come through brokers and can be based anywhere, including the USA. American institutional investors can buy London-listed paper through their brokers, subject to US securities rules.
There is risk. A sukuk does not guarantee investors get all their money back. If OQEP's business suffers badly, it could miss payments or fail to repay the principal. BBB- sits one notch above speculative grade, which signals moderate credit risk. The purchase undertaking, OQEP's promise to buy back the assets, gives investors a claim. But it is only as strong as OQEP itself.
Learn
What happens when a stock you own fails a Shariah screen
A retiree holds shares in a company that has been halal for years. Then the company takes on a large interest-bearing loan. Its debt ratio crosses the screening limit, and the next quarterly review drops it from the Shariah index.
Funds that track the index sell it at the next rebalance. An individual investor has a decision to make: sell the holding, or keep it and purify the returns by giving the impure portion to charity. Scholars allow a grace period in many cases. The Oct 6 edition covered how purification handles income that slips through. A sound habit is to check your holdings when index reviews are published, usually every quarter, and act on the ones that fall off.
Ijara — the lease that ends with you owning the asset
What it is: Ijara is a lease. One party owns an asset, the other pays a fixed monthly amount to use it. There is no interest. The rent is payment for the use of something real.
How it works: In the lease-to-own form (ijara wa iqtina), the monthly payment is split. Part is rent for using the home or car. Part goes toward buying the asset. The owner keeps ownership risk during the term: in the classical structure, major repairs and insurance stay with the owner, not the user. At the end of the payments, ownership passes to the user.
A real-world example: IjaraCDC, a Michigan nonprofit, structures home purchases in the USA this way. A licensed provider buys the home alongside the buyer, the buyer pays monthly, and ownership transfers when the payments are done. In the UK, Ayan Capital uses the same structure for car finance: it buys and owns each vehicle, customers pay fixed monthly rentals, and they take ownership at the end.
All sources
- Petra (Jordan News Agency) — Cabinet approves JD400 million Islamic sukuk for Greater Amman Municipality (Oct 11, 2026)
- Further Arabia — OQEP sukuk programme taps US$2B Islamic debt market (Oct 15, 2026)
- IjaraCDC — About: Ijara Community Development Corporation's Ijara lease-to-own home financing model
- The Times of Texas — Guidance Residential's Declining Balance Co-ownership Program; over $4.9B funded
- TNGlobal (PR Newswire) — Ayan Capital's Ijara wa Iqtina car finance structure
- HalalScreener — AAOIFI Standard 21 screening method: sector exclusions and financial ratio screens