Sukuk or Islamic Bonds

Sukuk is the Arabic name for Sharia or Islamic law compliant fixed income securities, also known as Islamic bonds. Sukuk represent a partial ownership in a Sharia compliant asset unlike conventional bonds, which represent a debt obligation. The structure of sukuk is designed keeping Islamic law in mind, which forbids earning money from money (i.e. interest). Unlike conventional bonds that pay out interest to bond investors, sukuk passes on profits (and losses) from the underlying asset to sukuk investors. Sukuk have become a popular source of financing for companies and governments from countries that have a large Muslim population such as United Arab Emirates, Malaysia and Indonesia.