Not all sukuk are created equal, IMF study finds
Washington, August 14, 2014
Investors treat a company's shares differently depending on the specific types of Islamic bond it issues and the reputation of the Islamic scholars who oversee the instruments, a study by the International Monetary Fund found.
The study, published this week, is one of the first systematic efforts to establish a numerical link between investors' behaviour and sukuk structures, and as such it may influence companies to choose certain structures over others.
The IMF based its findings on the stock price movements of companies which issued sukuk between 2006 and 2013, using a sample of 131 sukuk deals across eight countries including Qatar, Saudi Arabia, the United Arab Emirates and Malaysia.
Global sukuk issuance could reach $130 billion in 2014, according to a Thomson Reuters study. About a dozen types of sukuk are in use worldwide.
All of them claim to follow religious principles such as bans on interest payments and pure monetary speculation, but some resemble conventional bonds in important ways while others have equity-like characteristics. - Reuters