Briefly summarize the article and the issue of the impact of Islamic law on debt markets in the Middle East. “Islamic Bond Decree Cripples Sukuk, Imperils Projects” is a very wise way to explain the situation in this article. This article is basically explaining how sales of Shariah-compliant debt, which financed Dubai’s Palm development and all the other real-estate development around the area fell 50 percent in 2008 because Bahrain based group of Islamic scholars prescribed in February that these bonds are not up to par by Islamic rules. New bonds with comply with rules of Islamic Shariah have been issued which caused the borrowing costs to rise up excessively. The article also explains how the banks sold sukuk by using assets to generate income which is the equal to the interest earned on regular debt, but the money cannot be used to finance, gambling, guns, or alcohol. Religious aspect of decreeing the bonds was not only the reason that was explained in this article, the second reason was “unified rules” in the six Arab countries. This change has made the sukuk market very uncertain to invest in.
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This note was uploaded on 01/25/2011 for the course FIN 320 taught by Professor Mercury during the Fall '10 term at Central Connecticut State University.