Is it permissible to invest in Islamic Sukuk?

Sukuk are Islamic financial certificates that mirror bonds in western finance but adhere to Shari’ah principles. Unlike traditional interest-bearing bonds, Sukuk involves selling certificates to investors, who then gain partial ownership in an asset purchased with those funds.

The issuer commits to buying back these certificates at a predetermined future date, and at face value. This Shari’ah compliant structure allows for debt financing without interest, linking investor returns directly to the performance of a tangible asset. (Re: investopedia.com)

Our Darul Ifta does not approve of any form of ‘Islamic Investments’ due to many grey areas. For example, the buyback clause in Islamic Sukuk is problematic. Furthermore, bonds have to be registered with conventional banks which involves transactions containing Riba (interest).

The explanation cited above is merely in theory. Whether it is being applied in the manner stated herein, is not certain. We will have to scrutinize and thoroughly go through each clause in the blue print/contracts before we reach a conclusion.