A Sukuk is the Islamic equivalent of a bond but created to comply with the principles of Shariah law which bans paying or receiving interest. The sukuk must be asset backed and no speculation is allowed. Since Shariah law forbids paying interest, the 'coupon' is paid as a share of profits on the assets.

The credit crunch of 2008 raised the possibility of a potential sukuk default in Dubai, with the conclusion that many sukuks were issued quickly to satisfy investor demand, without necessarily complying fully with Shariah law. This means that the sukuk holder may not have had an enforceable claim against the sukuks underlying asset should the issuer default.

What to do if you need more help

If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.

We hope you found this information useful.

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