[The Relationship between Sukuk Prices and Interest Rates In United Arab Emirates UAE]

By

[Name of Faculty Member]

[Name of Department]

[Year]

Abstract

The research investigates about the development of sukuk bonds and the emerging market of sukuk bonds. Basically is an islamic securities assets-based and provides the investor a resonable profit for their investments. Sukuk is a Certified Financial is technically a type of contract, but in practice notes are kind of equivalent to these bonding certifcates. Major research will be investigating different types of Sukuk bonds and their structures with the help of the diagram. It will be disucssing the risks associated with those types of sukuk. Also discusses how these risks can be mitigated. Sukuk can be asset-based or asset-backed be designed. In an asset-backed structure similar to a securitization extent, determine the payments on the underlying transaction, the payments under the Securities. In an asset-based design, as this is used mostly for Sukkuk to be reissued. The Sukuk holders at asset-based structures is not even access to the assets of the underlying transaction. The issuer promises to the Sukuk holders namely, in this case only to repurchase the Sukuk and thus ensures that the investor also in impairment of assets receives the face value of the Sukuk. As with conventional loans in repayment, the issuer's credit rating is crucial. The repayment amount is fixed there from the beginning. This has an impact on the risk of default and rating of the Sukuk.

KEYWORDS: Sukuk, Islamic capital market, legal challenges, Shari'a, intrest rates, inflation rates, etc.

Table of Content

ABSTRACT2

CHAPTER 1: INTRODUCTION4

1.1 Background4

1.2 Theoretical Background8

1.3 Problems statement10

1.4 Aims and objectives10

1.5 Research Questions11

1.6 Dissertation Layout11

CHAPTER 2: LITERATURE REVIEW12

2.1 Introduction12

2.2 Review the Literature from Previous Studies12

CHAPTER 3: THE DEVELOPMENT OF SUKUK, GROWTH AND TYPES16

3.1 The Sukuk Development and Growth16

3.1.2 The Growth of Sukuk19

3.2 Sukuk Types21

CHAPTER 4: THE RISKS IN SUKUK AND RISKS MITIGATING…………………………………....23

4.1.1 Rate of Return Risk23

4.1.2 Hazard rating of Forex23

4.1.3 Default Risk24

4.1.4 Coupon Payment Risk25

4.1.5 Redemption of Asset Risk25

4.1.6 Shariah Risk26

4.1.7 Categories of Shariah Risk29

4.1.8 The Risk Mitigation for Sukuk31

4.1.9 Risk Mitigation Tools for Conventional Bonds31

CHAPTER 5: RESEARCH METHODOLOGY33

5.1 Research Framework33

5.2 Dissertation Layout33

5.3 ResearchMethods33

5.4 Econometric Model34

CHAPTER 6: ANALYSIS AND DISCUSSION ON THE RELATIONSHIP BETWEEN SUKUK PRICES AND INTEREST RATE38

6.1 Results38

6.2 Discussion48

CHAPTER 7: CONCLUSION50

7.3 Evaluation of Research Process57

7.4 Requirement for Future Research58

7.5 Recommendations59

BIBLIOGRAPHY60

APPENDIX61

Glossary61

Data Sheet62

CHAPTER 1: INTRODUCTION

1.1 Background

Shariah which is the law of Islam, does not allow taking or giving of usury or riba in the form of interest. Accordingly, the Muslim countries are adopting the Islamic system while impeding the progress of the conventional system of finance and banking. The current market is replete with a new Islamic and Shariah-compliant product by the name of Sukuks. These are Islamic counterparts to the regular bonds issued by both the governnments as well as by the corporate entities. In addition, these are asset-backed securities that are rather safe.

The Markets of Debts are a very important portion of the economical sector and it efficiently makes up for the cash given by the banking industry. In the upcoming financial economies markets are ...