Sukuk are sometimes referred to as Islamic bonds. They are structured to avoid the Islamic prohibition on interest. Generally speaking, this is done by paying Sukuk holders with the cash flows generated by specific assets, which are put into a special-purpose vehicle, or SPV.

Most Sukuk are bought and sold in the over-the-counter (OTC) market, where potential yields, maturities and risk factors affect price. Like conventional bonds, rating agencies rate Sukuk based on their credit quality and the issuer’s ability to pay investors.

Sukuk receive ratings that look exactly like conventional bonds.