Date: 4th January, 2010IntroductionThis report will determine the Financial Risks involved in Sukuk structures and the way that Sukuk investment certificate holders will probably be treaded, as compared with other more-conventional interest-based securities. This research also contrasts the risk underlying long established predetermined profits mechanisms with those underlying the Sukuk structures. Interest rate exchanges in addition to other derivative mechanisms are employed in order to supervise the risk of the customary predetermined revenue mechanisms. These mechanisms are not accessible to Islamic asset executives. The Islamic Bond, or Sukuk, defaults of Kuwait's Investment Dar and Saudi Arabia's Saad Group this year rose uncertainty on the Financial Risks inherent in Sukuk structures. Interest rate swaps and other derivative instruments are utilized to manage the risk of the traditional fixed income instruments, but these instruments are not available to Islamic asset managers.
Sukuks are Islamic bonds or financial certificates that comply with Islamic law and Sharia.
English: A green version of http://commons.wikimed...
Finance
The distribution of the predominant Islamic madhha...The conventional interest paying bond structure is prohibited by Islamic law, thus, in order to participate in the financial markets, Sukuk issuers sell Sukuk certificates to investors, who will later return the certificate to the buyer for a pre-determined rental fee. The issuer of the Sukuk also makes a contractual promise of purchasing back the Sukuk certificates in the future, at par value. During 2009, the Sukuk of the Saad group in Saudi Arabia and Kuwait's investment Dar witnessed some uncertainty in the issue of the financial risks inherent in Sukuk structures. Derivative instruments and interest rate swaps are used worldwide by financial managers to manage the risks involved in traditional fixed-income financial instruments, but Islamic managers do not have such instruments at their disposal. Sukuks, managed by Islamic asset managers must be able to link the returns in the cash flow and returns of the...