In: Finance
Sukuk is the Arabic name for financial certificates, which was also commonly referred to as "Sharia Complaint"bonds.Sukuk is defined by Accounting and Auditing Organization for Financial Institutions as Securities of equal denomination representing individual ownership interests in a portfolio of eligible existing or future assets.Different types of sukuk are based on different types of Islamic contracts depending upon the project the sukuk is financing.
Sukuk securities tend to be bought and held . As a result few securities enter the secondary market to be traded. And also only public sukuk are able to enter this market as they are listed on stock exchanges.
Sharia considers money to be measuring tool for value and not an asset in itself , it requies that one should not receive income from money alone,because it is said to be called as "riba" and thereby it is forbidden. base on its perspective , certificates of debt are not tradable except at their par value.
Sukuk and bonds are sold to investors who receive a stream of payments, until the date of maturity of the sukuk or bond,at which they get their original investment back.
Sukuk and bonds are intended to provide investment with less risk than equities and so are often used to "balance a portfolio"of investment instruments.