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Abstract
Sukuk (plural) are unique fixed-income vehicles structured as asset-, project- or service-backed entities. They provide proportionate ownership in a designated asset or pool of assets. This enables investors (sukuk holders) to have an undivided, beneficial ownership in the underlying assets, entitling them to a share of the revenues and proceeds upon disposition. A saak (singular) offers the diversification of fixed income, paying an income stream (similar to rental income), while remaining Shari’ah compliant. Since interest- bearing instruments are not permissible under Islamic Investment Principles, the investment concept called sukuk was created as an alternative to traditional bonds. Sukuk are asset-based securities whereas bonds are debt-based. Sukuk are not subject to interest-rate movements. This article provides an overview of the market for sukuk.
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