What is Sukuk ?
When you buy bonds, you are essentially loaning money to the issuer for a fixed period. You will receive a predetermined interest rate, which is usually paid annually within that fixed time frame. The value of the bond is repaid at the end of the period and you get your money back. However, because Shariah law prohibits the generation of money from money (such as interest or “riba”), financial instruments that involve the trading and selling of debts, and conventional loan lending (which includes conventional bonds) are not permissible.