The Infant Islamic-Bond Industry Faces a Crisis

Islamic law forbids the generation of money from money—interest. Sukuk, or Islamic bonds, thus differ from their conventional peers. They are backed by assets and instead of lending the issuer money, the holder owns a nominal share of what the cash was spent on and receives an agreed ratio of the profit generated by the investment. At maturity, the issuer returns the principal by buying the investor's share in the asset.