CA-3.4.15
Istisna'a financing with an "Exposure to Asset" structure is required to meet the characteristics as set out below in order to qualify for the above RW:
(a) The segregation of the project's liabilities from the balance sheet of the Istisna'a ultimate buyer or project sponsor from a commercial and accounting perspective which is generally achieved by having the Istisna'a contract made with a special-purpose entity set up to acquire and operate the asset/project concerned;
(b) The ultimate buyer is dependent on the income received from the assets acquired/projects to pay the purchase price;
(c) The contractual obligations give the manufacturer/ constructor/ bank a substantial degree of control over the asset and the income it generates — for example, under the BOT arrangement where the manufacturer builds a highway and collects tolls for a specified period as a consideration for the selling price; and
(d) The primary source of repayment is the income generated by the asset/project rather than relying on the capacity of the ultimate buyer.
January 2015