IslamicFinance.de

A sukuk is a sharia-based hybrid instrument that can have the features of both a conventional debt instrument and of equity. Sharia requires all financial contracts to be rooted in real sector activities. Sukuk has coupons paid at prefixed times in the future. However, the quantum of the coupon is not prefixed, but depends on the performance of the sukuk-issuing enterprise. This ensures that the sukuk holders partake in the risk of the enterprise. A sukuk can be issued for any commodity. The commodity-linked sukuk would not only be a win-win instrument for both investors and issuers, it would also be beneficial to society.