Long Term Conventional Bonds versus Long Term Sukuk Issuances and Their Determinants in Malaysia

Abstract

Both instruments, either conventional bonds or sukuk (Islamic bonds) were trading under the same roof, in the secondary market and through over the counter in Malaysia. The main different is relying on sukuk trading shall be halal in transactions and fully compliant to shariah Islam but for conventional bonds is not restricted to this constituent. The objective of this study is to investigate the mean different between performance of sukuk and conventional bonds. Throughout, this study focused on the sample of 256 tranche of issuances consists of conventional bonds and sukuk with number of observations of 112 and 144 respectively. Secondary data is gathered from Bank Negara Malaysia (BNM) bond information Hub for fifteen conservative year's period from 2000 to 2014. The methods of independent sample T-test and Levene's test are employed in order to test the hypothesis. Interestingly, results revealed there is a significant mean different between long-term conventional bonds and sukuk performance denoting that these two debt instruments are performed in different ways even though trading in the similar marketplace.