Islamic Finance For Dummies

Chapter 13

Investing in Islamic Bonds: Sukuk

In This Chapter

Contrasting sukuk and conventional bonds

Finding out how sukuk are traded, rated, and issued

Scouting sukuk products

Tracing the sukuk market’s evolution

As I note in Chapter 11, the Islamic capital market features various investment instruments that fall into two broad categories: sharia-compliant equities and sukuk, or Islamic bonds. In this chapter, I focus on sukuk, which comprise one of the fastest growing segments in both the Islamic and global financial industries.

Government and corporate issues from both Muslim and non-Muslim countries are driving the growth of sukuk. At the end of 2011, outstanding sukuk were valued at an estimated $182 billion and growing at a rate of 30 percent per year.

Sukuk have gained acceptance in some Western countries and companies, boosting their global presence. For example, the German state of Saxony-Anhalt has issued sukuk, as have corporations such as General Electric, East Cameron ...