What is driving the investor appetite for sukuk?

There has consistently been a shortage of Sharia-compliant instruments for Sharia-compliant institutions to invest in and, in the case of sukuk, the treasury functions of those institutions in particular. As the Islamic finance industry grows, so has the demand for such instruments, both as a result of the corresponding growth of the relevant Sharia-compliant institutions but also other investors such as Sharia-compliant investment funds. In addition, the investor base for sukuk typically includes conventional bond investors that are not necessarily looking to invest on a Sharia-compliant basis but do want to invest in the underlying obligor. Increasing, familiarity with sukuk as a product is likely to further expand this investor base.