Islamic bonds

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(Also see: Islamic finance)

Islamic bonds, or sukuk, conform to Shariah law, which requires that investors profit only from transactions based on the exchange of assets, not money alone; therefore, interest is banned.

Bankers sell Islamic bonds by using property and other assets to generate income equivalent to interest they would pay on conventional debt. The money can't be used to finance gambling, guns or alcohol.

The world's top five banks -- UBS AG, HSBC, Barclays Plc, BNP Paribas SA and Citigroup -- have Islamic units.

Sales of sukuk grew nine times faster than international corporate bonds last year. According to the Islamic Financial Services Board, an association of central banks based in Kuala Lumpur, the assets managed under Islamic rules will almost triple by 2015 to $2.8 trillion.[1]

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