Sales Certificates - Benefits To Issuer

1. Certificates turn the fixed costs of loans or bonds into variable costs. Some of the specific risk of individual firms is thus transferred to investors who can better deal with such risk through diversification.
2. There is no explicit repayment of principal and no collateral impairment hence fewer restrictive covenants and bankruptcies.
3. There is no need for a firm to give up ownership to obtain financing at the discount rates that apply to growth vehicles.
4. Certificates appear to conform to Shari'ah law since the investor shares the issuer's risks: issuers have access to an expanded set of investors.
5. Certificates can be viewed as self-liquidating equity.