Glossary

Sukuk

صكوك

Definition

Islamic certificates of ownership in a tangible asset, project, or pool of investments — often called the Islamic alternative to bonds.

Unlike conventional bonds (which are debt instruments paying interest), sukuk represent ownership of an underlying asset and pay returns from that asset's cash flows. The global sukuk market is dominated by sovereign issuers in Malaysia, Saudi Arabia, and the UAE.

AAOIFI standards distinguish over a dozen sukuk structures (ijara, musharaka, mudaraba, wakala, hybrid). Mufti Taqi Usmani famously criticised many pre-2008 sukuk issues for departing from the underlying-asset principle.