In the midst of a vicious insurgency with Al Qaeda in which some members of the Yemeni government are thought to be siding with the Jihadists, the Yemeni central bank has floated its first sukuk…

Note that this one-year sukuk is projected to have a return of between 15% and 18%. Such a return is not characteristic of an income-oriented investment. Not even the lowest rated junk bonds produce a 1-year return of 15% to 18%. This indicates to us that there must be much risk involved here, at least with this Yemeni issue. Perhaps this is because of the insurgency and instability in Yemen, but it may also indicate that sukuk issuers are making BIG promises that sooner or later some of them won’t be able to keep.


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