Use of interest rate benchmarks for determining profits on Islamic sukuk

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“Benchmarking” in Islamic finance is a method of predetermining the magnitude of profits paid by issuers of Islamic sukuk (certificates of investment) to investors. Benchmarking is done by linking investors’ profits to an interest rate, usually Libor (London Interbank Overnight Rate). Normally, a few basis points are added to the reference interest rate to arrive at the benchmarked profit rate.......... Download the full article in pdf attachment (below)

Abdul Karim Abdullah

Abdul Karim Abdullah @ Leslie Terebessy is an Assistant Research Fellow at IAIS Malaysia.