The party in a sukuk issuance that stands obliged, legally or contractually, to make payment to sukuk holders against their holdings. Commonly, an obligor is a sukuk issuer that is bound to make payment of the sukuk rate and repayment of the principal amount (invested funds) to the sukuk holders as per the contract terms and conditions.

An obligor is an entity in need of funding which sells the sukuk certificates directly to the investors against cash payment. The issuer (sukuk issuer) is usually a special purpose and bankruptcy remote shell company (SPC), or SPV, that sells sukuk to investors and represents them against the obligor (originator).

An obligor is technically a borrower in the sukuk market (very much like a borrower in the bond market). However, the term “obligor” is used instead of borrower, as sukuk are supposed to reflect a different relationship between investors and issuers, rather than simply a borrower-lender relationship.

Obligor might be a private company or a government seeking to raise funds for certain purposes.