The differences between ṣukūk and bond
| Ṣukūk | Bonds | |
|---|---|---|
| Ownership | Partial ownership of an asset | Debt obligation |
| Compliance | The assets that back ṣukūk should be compliant with Sharīʿah | Compliance with laws of country/locality they are issued in |
| Pricing | The face value of a ṣukūk is priced according to the value of the assets backing them | Bond pricing is based on credit rating, i.e. the issuer’s credit worthiness |
| Rewards and risks | Ṣukūk holder receives a share of profit from the underlying asset. Ṣukūk holder accepts a share of any loss incurred | Returns from the bonds correspond to fixed interest (making them riba) Their principal is guaranteed to be returned at the bond’s maturity sate |
| Effect of costs | Ṣukūk holders are affected by costs related to the underlying assets Hight costs and translate to investor profits and vice versa | Bond holders generally are not affected by costs related to the assets, project, business or joint venture they support. The performance of the underlying asset does not affect investor rewards |
| Sales | Sale of ownership in the assets backing them | Sale of Debt |
| Bonds | ||
|---|---|---|
| Ownership | Partial ownership of an asset | Debt obligation |
| Compliance | The assets that back | Compliance with laws of country/locality they are issued in |
| Pricing | The face value of a | Bond pricing is based on credit rating, i.e. the issuer’s credit worthiness |
| Rewards and risks | Returns from the bonds correspond to fixed interest (making them | |
| Effect of costs | Bond holders generally are not affected by costs related to the assets, project, business or joint venture they support. The performance of the underlying asset does not affect investor rewards | |
| Sales | Sale of ownership in the assets backing them | Sale of Debt |
Source(s): Bond+Ṣukūk Information Exchange (bix) (2019)
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