ALGIERS, Algeria, May 21. Collaboration between conventional bonds and Islamic financial instruments such as sukuk contributes to portfolio stability and risk reduction, said Mohammad Sharaf, Treasurer of the Islamic Development Bank (IsDB), Trend’s special correspondent reports.
Speaking at the panel discussion “Sovereign Sukuk: A Strategic Lever for National Financing”, held during the annual meetings of the IsDB Group in Algiers, Sharaf emphasized that this synergy plays a key role in driving growing interest in sukuk.
“Cooperation between traditional bonds and sukuk offers a degree of stabilization or relative risk reduction in investment portfolios. That is why I believe this is one of the main reasons behind the increasing interest in sukuk. The global sukuk market may reach a trillion dollars next year,” he said.
Sharaf noted that the issuance of sukuk is attracting not only Islamic countries but also non-Islamic ones.
“A country like the Philippines has already issued sukuk, as it provides advantages for both issuers and investors,” he said.
He also underlined the importance of diversification and the development of the Islamic capital market.
“Sukuk supports Islamic banks by serving as an effective tool to absorb excess liquidity over the long term. In countries lacking such instruments, banks are largely dependent on short-term operations,” Sharaf explained.
He pointed out the competitive advantages of sukuk for issuers.
“First, they seek financing at the lowest possible rates, and the availability of liquidity within a country enables that. Second, market rates for sukuk have become comparable to those of conventional bonds, allowing for diversification and reducing dependence on a single type of investor,” he stated.
Sharaf concluded by highlighting the substantial proliferation of the sukuk market.
“Whereas in the past it was limited to specific sectors and geographies, today it spans a wide range of areas and regions. This enables the attraction of new categories of investors and reduces reliance on traditional financial centers,” he said.
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