Instruments or bonds are securities issued by governments or companies to raise funds from investors for a specified period with a specific repayment date. Instruments and bonds usually distribute a profit rate (fixed or variable) periodically. At the end of the instrument or bond, known as the maturity period, the security source pays off capital.
The most critical differences between Sukuk, bonds, and shares:
When the company issues shares, it sells a share of the company's ownership for cash. However, when an entity issues instruments or bonds, it borrows funds for securities while ensuring that the amounts borrowed at maturity are returned. Shares are issued only by companies, while companies and government agencies issue Sukuk and bonds. Sukuk and bond prices are less volatile against assets, while equity yields are comparatively higher than Sukuk and bonds. The instrument or bondholder receives an exceptional periodic return with a return guarantee of capital. In contrast, the shareholder receives an unsteady percentage of dividends and no proof of capital return. The holder of the instrument or bond has priority in liquidation or bankruptcy of the company.
What are the fundamental differences between Sukuk and bonds?
Sukuk are Shariah-compliant securities issued by government agencies or companies to develop development projects, under which the investor becomes a partial owner of the asset contracted up to maturity. The bonds are securities where the investor lends money to the source until the due date. Bondholders receive specific interest, while Sukuk holders receive a specified portion of the profits generated by the contracted asset.
What are the uses of Sukuk and bonds?
PRO GCC An investment opportunity to obtain periodic profits within a specified period. Diversification strategy enables the investor to add sukuk and bonds to his investment portfolio and other securities. Let query us at PRO GCC, a well-established firm that invests in generating revenues