Indonesia successfully raised 12 trillion rupiah ($734 million) through an Islamic bond (Sukuk) auction on Tuesday, surpassing its initial target of 10 trillion rupiah, according to the finance ministry. The auction attracted total bids worth 19.91 trillion rupiah, though this was lower than the 30.26 trillion rupiah recorded in the previous auction on February 11.
The Ministry of Finance announced the results of the auction held on February 25, 2025, highlighting the strong investor interest despite the drop in total bids compared to earlier rounds.
In a similar move, Pakistan recently tapped into the Islamic bond market, raising $1 billion at a record return rate of 7.95% to aid in its economic recovery.
What are islamic bonds (Sukuk)?
Islamic bonds, known as Sukuk, are Sharia-compliant financial instruments that differ from traditional bonds by avoiding interest-based returns. Instead, Sukuk are linked to tangible assets, offering investors a share in the income generated by these assets.
The core principle of Sukuk is that holders gain undivided ownership in the underlying asset, making them eligible for the returns it produces. While rooted in Islamic finance principles, Sukuk investments are open to all investors as they align with ethical standards and focus on fairness and justice.