For some time now, promoters of Shariah-Compliant Finance have claimed that their products offer a safer, more “ethical” alternative to traditional financial products.
In fact, they’ve come up with contrived instruments to make Shariah-Compliant Finance more palpable to non-Muslims. An example is the sukuk market. Sukuk are popularly known as “Islamic bonds” and, as one short-sighted oil and gas firm down in Cameron Parish, Louisiana is finding out the hard way (see article link below), they come with a lot of strings attached.
More important for the rest of us, despite the misleading claims of those in the Shariah-Compliant Finance industry, sukuk produce lower returns than conventional bonds, are often illiquid and are defaulting at an alarming rate. No wonder a bar chart of the sukuk market looks like a cliff…
More on this story from the Wall Street Journal:
