Abstract
The study addresses the question “How do the financial markets perceive and price
internationally issued Islamic bonds?” It is examined by empirically testing for the evidence of
co-integration of sukuk yields with the US Treasury yields using Vector Error Correction (VEC)
models. Our results indicate that the sukuk yields are highly co-integrated with the US Treasury
yields in long-term relationships. The short-term dynamics of the sukuk yields with the interest
rate series is, however, complex showing bi-directional influences. We infer that the international
financial markets are viewing and pricing sukuk in a manner similar to that for the conventional
bonds
Jamshed Y. Uppal, Inayat Ullah Mangla. (2017) Co-integration of Sukuk and Bond Yields - Evidence from Globally Placed Sukuk, Journal of Management Sciences, Volume 4, Issur 1.
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