Tuesday, 29 October 2013

Sukuks [or Traditional Bonds]: What’s the Difference?

MAIL ONLINE: A sukuk is an Islamic bond. It generates returns to investors without breaking Islamic law that prohibits interest.

The essential difference with a conventional bond is that each sukuk represents a share of ownership of the asset you are investing in. Regular bonds represent a share of debt.

Whereas normal bonds do not give the investor a share of ownership in the project they support, sukuk investors get partial ownership.

The criteria for what you can invest in with a sukuk is limited. It must be sharia-compliant. Conventional bonds which can be used for anything.

Bond holders receive regularly scheduled interest payments for the life of the bond - often at a fixed rate - and they are not affected by costs related to the asset.

Sukuk holders receive a share of the profit and accept a share of any loss incurred. [Source: Mail Online] | Tuesday, October 29, 2013