Conventional Bonds Research Articles

Impact of interest rate surprises on Islamic and conventional stocks and bonds

This paper studies the impact of interest rate news surprises on Islamic and conventional stock and bond indices, using a dataset which covers interest rate announcements and forecasts, as well as stock and bond indices in three Islamic and eight non-Islamic countris. We find that interest rate surprises tend to have a smaller impact on the returns and volatility of Islamic than conventional bonds because Islamic bonds are structured to avoid explicit interest rates. However, interest rate surprises have about the same or bigger impact on the returns and volatility of Islamic relative to conventional stocks, despite the low amounts of cash and debt holdings of firms comprising Islamic stock indices.

Sukuk and conventional bonds: shareholder wealth perspective

PurposeThis study aims to comprehensively examine the stock market effects of announcements by firms to issue conventional bonds versus Sukuk. In addition, the authors investigate whether the choice of instrument depends on the tax status and government backing of the issuing firm. They split the sample into whole (2000-2015), pre-crisis (2000-2007) and post-crisis (2010-2015) subsamples.Design/methodology/approachThe authors use event study methodology, market model and FTSE Bursa Malaysia EMAS index on 14 different event windows of which five are symmetric and nine are asymmetric. Further, parametric and distribution-free tests are used to investigate the difference of cumulative abnormal returns when using the two instruments (Sukuk and conventional bonds). For the choice of issuing conventional bonds or Sukuk, Heckman procedure is employed to control for the self-selection of the announcement effects.FindingsThe analysis indicates only insignificant difference in reaction to Sukuk and conventional bond issuances for the overall period and pre-crisis period. However, and importantly, they find strong evidence supporting the Malaysian stock abnormal return reaction to Sukuk compared to conventional bond issuances after the global financial crisis. Interestingly, they find that tax incentives and government backing are significant determinants in issuing Sukuk over conventional bonds. Such evidence is confirmed when using a wide range of robustness checks including four different market indices and both parametric and non-parametric tests.Research limitations/implicationsThe empirical analysis is subject to limitations. First, the sample is limited to Sukuk issues domiciled in Malaysia. Second, given that Sukuk are collateralized whereas conventional bonds are not, it would only seem logical for the former to be issued by riskier firms whereas the latter would be issued by stronger firms with stable cash flows. The future research can explore this issue some more. Finally, comparing Sukuk with other similar ethical sources of traded capital may provide insights into the globalization of such economic, trade and financial reforms in and outside Malaysia.Originality/valueTo the author’s knowledge, no research has been conducted studying the differential and conflicting results to announcement of Sukuk issuance in the literature, nor the stock market effects of announcements to issue Sukuk over the pre-crisis (2000-2007) and post-crisis (2010-2015) periods. Thus, the study attempts to assess previous findings and contribute additional evidence that investigates the issue in rich setting.

Analysis of value at risk of Sukuk and conventional bonds in Pakistan

PurposeThe purpose of this paper is to provide empirical evidence that Sukuk are different from conventional bonds from risk perspective. This study is about the comparative risk analysis of Sukuk and conventional bonds in Pakistan.Design/methodology/approachSample consists of 15 Sukuk and 30 Term Finance Certificates issued in Pakistan. Value at risk is deployed by using delta normal approach to calculate risk. Two portfolios are formed separately with equal investment of ₹3m to explore the maximum loss an investor would have in portfolio of Sukuk and conventional bonds separately.FindingsResults revealed that Sukuk are less risky and more stable instrument as compared to conventional bonds. Risk and stability of Sukuk are explained with diversification theory and liquidity perspective. It is found that correlation among most of Sukuk securities are less or negative, which help in diversifying their risk. However, the attribute of stability can be due to the few days of trading in case of Sukuk comparatively.Originality/valueLiterature has explored the operational differences between conventional and Islamic bonds on theoretical basis. However, few studies explain their differences empirically especially with respect to risk in case of Pakistan where debt market is developing. Therefore, the originality of this research lies within its comparative investigation of risk for two securities that are different from their operational perspectives.

Systemic inflammatory response syndrome as a severity predictor in acute pancreatitis

In this paper, we contribute to the on-going discussion on whether Islamic bonds (sukuk) are different from conventional bonds. We investigate the impact of regional and global uncertainty factors including financial and economic uncertainty on conventional bonds and sukuk returns dynamics. Using quantile regression approach for the period from January 2010 to December 2014, empirical results show independence between sukuk returns and global and regional economic policy uncertainty for all the quantiles, but causality relationship when the market is bearish. However we find co-movement and causality relationship between conventional bond market and global financial and economic uncertainty factors. For comparison purpose, we examine the impact of global and regional uncertainty factors on the sukuk returns in the case of the largest country sukuk market in the world which is for Malaysia. Our findings confirm that sukuk are different than conventional bonds in term of co-movement with global and regional uncertainty factors and these two assets are complementary and not substitutes.

Analysis of Indonesian Sovereign Green Bond and Green Sukuk Initiatives

AbstractGreen bonds, as a vehicle to mobilize additional investors in supporting sustainable finance, have been a longstanding topic of discussion. Moreover,  Green sukuk also have been developed in Islamic jurisdiction markets, mirroring the nature of green bonds in accommodating socially responsible investments. While earlier studies focused on the development of those new asset classes in the developed economies, this paper specifically examines the context of emerging countries, in particular Indonesia. Indonesia is on its way to issue the first green bonds and green sukuk; therefore, it is needed to assure that the initiatives will not disrupt the existing practices. This paper aims to look at the existing Indonesian conventional bond and sukuk markets, then analyse whether the preconditions are sufficient – from financial stability perspectives. Contrary to the Islamic researches, this paper will point out that sukuk practices may not be immune from instability. The paper argues that strong support by the government may serve as a stabilising effect on the policy agenda to launch green bonds and green sukuk in Indonesia. This paper, however, does not scrutiny sukuk structures per case, which may be useful to identify specific issues that may arise.

Are One-Electron Bonds Any Different from Standard Two-Electron Covalent Bonds?

The nature of the chemical bond is perhaps the central subject in theoretical chemistry. Our understanding of the behavior of molecules developed amazingly in the last century, mostly with the rise of quantum mechanics (QM) and QM-based theories such as valence bond theory and molecular orbital theory. Such theories are very successful in describing molecular properties, but they are not able to explain the origin of the chemical bond. This problem was first analyzed in the 1960s by Ruedenberg, who showed that covalent bonds are the direct result of quantum interference between one-electron states. The generality of this result and its quantification were made possible through the recent development of the generalized product function energy partitioning (GPF-EP) method by our group, which allows the partitioning of the electronic density and energy into their interference and quasi-classical (noninterference) contributions. Furthermore, with GPF wave functions these effects can be analyzed separately for each bond of a molecule. This interference energy analysis has been applied to a large variety of molecules, including diatomics and polyatomics, molecules with single, double, and triple bonds, molecules with different degrees of polarity, linear or branched molecules, cyclic or acyclic molecules, conjugated molecules, and aromatics, in order to verify the role played by quantum interference. In all cases the conclusion is exactly the same: for each bond in each of the molecules considered, the main contribution to its stability comes from the interference term. Two-center one-electron (2c1e) bonds are the simplest kind of chemical bonds. Yet they are often viewed as odd or unconventional cases of bonding. Are they any different from conventional (2c2e) bonds? If so, what differences can we expect in the nature of (2c1e) bonds relative to electron-pair bonds? In this Account, we extend the GPF-EP method to describe bonds involving N electrons in M orbitals (N < M) and show its application to (2c1e) bonds. As examples we chose the molecules H2+, H3C·CH3+, B2H4-, [Cu·BH3(PH3)3], and an alkali-metal cation dimer, and we evaluated the components of the electronic energy and density, which account for the formation of the bond, and compared the results with those for the respective analogous molecules exhibiting the "conventional" two-electron bond. In all cases, it was verified that interference is the dominant effect for the one-electron bonds. The GPF-EP results clearly indicate that molecules exhibiting (2c1e) bonds should not be considered as special systems, since one- and two-electron bonds result from quantum interference and therefore there is no conceptual difference between them. Moreover, these results show that quantum interference provides a way to unify the chemical bond concept.

Corporate choice between conventional bond and Sukuk issuance evidence from GCC countries

Although there have been recent developments in respect of the diversification of capital markets in GCC countries, the motivations of the firms issuing Sukuk or conventional bonds have remained largely unexplored. Using a sample consisting of 88 Sukuk and 287 conventional bonds issued in GCC countries during the period from 2000 to 2015, this paper analyses the factors affecting an issuer's choice of employing an Islamic bond (Sukuk) structure as compared to conventional bonds instruments. The results suggest that there are some significant differences between Islamic and conventional bond issuer's choice determinants; these can be attributed to the Sukuk’s specific characteristics and to the issuer’s characteristics. Within the GCC region, the firms, which issue Sukuk, have more specific characteristics. By way of contrast, the determinants among those firms, which issue conventional bonds, have fewer specific characteristics. In addition, our findings provide evidence that in respect of the issuance of larger debt and long tenor, firms prefer to issue Sukuk rather than conventional bonds. However, with regard to the quality of the credit rating, our empirical proxies report a positive correlation with the issuance of conventional bonds and a negative correlation with the issuance of Sukuk.

Significant Difference in the Yields ofSukukBonds versus Conventional Bonds

Bond yields of Treasury and corporate bonds are observed in a listed exchange. This article reports the findings on the market yield behaviour of two types of debt securities in the same exchange, the sharia-compliant sukuk bonds and the normal conventional bonds. There are 17 exchanges where sukuk bonds are traded, and the outstanding value is estimated at US$ 1,200 billion. The average yields of sukuk Treasury bonds are significantly higher (premium) than that of conventional Treasury bonds. On the other hand, investors in the sukuk corporate bonds receive slightly lower returns (discount) of about 25 basis points in the case of long-term sukuk bonds. To the best of our knowledge, this is the first study to verify these differences using appropriate advanced econometric methods. These results have far-reaching implications for the market practices as well as for teaching of bond pricing behaviour since this new form of debt markets is growing at about 17 per cent a year.JEL Classification: F23, F31, G12

Differentiating between delinquent groups and gangs: moving beyond offending consequences

Even when controlling for high levels of delinquent peers, gang youth differ from their nongang counterparts on a variety of attitudinal and behavioral measures. Researchers have argued that differences can be attributed to the group processes present in the gang setting. This study explores the extent to which differences between youth in a gang and those in a delinquent group can be explained by Bandura’s social cognitive theory. Much of the prior research in this arena has relied on cross-sectional data; in this study, we expand on this prior research using fixed-effects modeling strategies with a multi-site panel of youth. The results comparing time periods when youth were in a gang versus a delinquent peer group indicate that gang-involved youth are more violent and have fewer conventional bonds. This work is able to advance our knowledge on attitudinal and behavioral differences between gangs and other types of peer groups.

How sukuk shapes firm performance

AbstractWith the large expansion of Islamic finance in the recent years, sukuk, which are the Sharia‐compliant substitute to conventional bonds, are now becoming more prominent. The aim of this study was to examine the impact of sukuk issuance on firm performance. To do so, we analyse how stock market performance and operating performance (OP) are influenced by issuance of sukuk and bonds on a sample of Malaysian listed companies. We consider the short‐term and medium‐term stock market reaction through the computation of cumulative abnormal returns and buy‐and‐hold abnormal returns. We investigate the impact on OP by performing regressions and by calculating abnormal operating performance (AOP) so that we can compare how issuance affects similar firms. We find that sukuk issuance generates a negative stock market reaction both in the short term and in the medium term. We also find evidence that issuing sukuk hampers OP. The analysis of AOP shows that sukuk issuers have better performance than their matched bond issuers, but that sukuk contributes to reduce the gap in performance over time. Overall, our results support the view that sukuk issuance hampers stock market performance, but that it is not attributable to a signalling effect on the bad financial situation of the issuer. We interpret our findings as evidence of adverse selection taking place on the financed projects and agency problems stemming from the specific sukuk structuring with stock market investors more reluctant to invest in sukuk issuers.

Pancreatic cancer in patients with autoimmune pancreatitis: a scoping review

In this paper, we contribute to the on-going discussion on whether Islamic bonds (sukuk) are different from conventional bonds. We investigate the impact of regional and global uncertainty factors including financial and economic uncertainty on conventional bonds and sukuk returns dynamics. Using quantile regression approach for the period from January 2010 to December 2014, empirical results show independence between sukuk returns and global and regional economic policy uncertainty for all the quantiles, but causality relationship when the market is bearish. However we find co-movement and causality relationship between conventional bond market and global financial and economic uncertainty factors. For comparison purpose, we examine the impact of global and regional uncertainty factors on the sukuk returns in the case of the largest country sukuk market in the world which is for Malaysia. Our findings confirm that sukuk are different than conventional bonds in term of co-movement with global and regional uncertainty factors and these two assets are complementary and not substitutes.

Sukuk Dan Kontribusinya Dalam Pembiayaan Pembangunan

This study analyzes the role of sukuk in national economic development. During this time the source of development financing consists of several kinds including taxes, bonds, foreign debt and Islamic bonds (sukuk). Sukuk has been developed in Indonesia since 2002 (published Indosat) and is still growing and the number of issuers are even greater. The research method using descriptive quantitative, data source in this research is secondary data obtained, balance of payments in the government, the state budget. This study uses a quantitative descriptive approach. Data were processed using matrix comparison of the performance of sukuk and conventional bonds to finance national development. The role and contribution of sukuk to finance the construction has been increasing. In 2011 amounted to 34% of financing needs are met through sukuk. Until 2016 the proportion was 60%. Instead the role of foreign debt be decreased. In 2011 only 7%, and by 2016 the portion close to 0%.

Crystal structure of bromido-fac-tricarbon-yl[5-(3,4,5-tri-meth-oxy-phen-yl)-3-(pyridin-2-yl)-1H-1,2,4-triazole-κ2N2,N3]rhenium(I) methanol monosolvate.

In the title compound, [ReBr(C16H16N4O3)(CO)3]·CH3OH, the ReI atom adopts a distorted octa-hedral coordination sphere with a facial arrangement of the three carbonyl ligands. Two N atoms of the chelating 5-(3,4,5-tri-meth-oxy-phen-yl)-3-(pyridin-2-yl)-1H-1,2,4-triazole ligand and two carbonyl ligands define the equatorial plane of the complex, with the third carbonyl ligand and the bromide ligand in axial positions. Conventional hydrogen bonds including the methanol solvent mol-ecules assemble the complex mol-ecules through mutual N-H⋯O-H⋯Br links [N⋯O = 2.703 (3) Å and O⋯Br = 3.255 (2) Å] into centrosymmetric dimers, whereas weaker C-H⋯O and C-H⋯Br hydrogen bonds [C⋯O = 3.215 (3)-3.390 (4) Å and C⋯Br = 3.927 (3) Å] connect the dimers into double layers parallel to the (111) plane.

Co-integration of Sukuk and Bond Yields - Evidence from Globally Placed Sukuk

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.

What explains corporate sukuk primary market spreads?

This study investigates the determining factors of international corporate sukuk pricing in the primary market for the period of 2004–2015. We present novel evidence for a unique data set covering all 63 international corporate sukuk issuances consisting of both a fixed margin rating as well a credit rating score. Our cross-sectional analysis indicates that both credit rating and maturity are significant factors which reduce issue spreads, whereas sukuk margin rating increases issue spreads. More prominently, Shari’ah scholar reputation and the type of sukuk are not statistically significant factors in the explanation of the issue spread. Our results are comparable with determinants of conventional bond pricing, and our findings further confirm existing sukuk market practices.

REKONSTRUKSI OBLIGASI: INVESTASI DALAM PERSPEKTIF SYARIAH

Investment is highly recommended in Islam. The Al-Quran and Al-Hadith of Prophet Muhammad PBUH and companions support the existence of investment in the use of productive capital resources. The investment must be in accordance with the rules of Islam. Norms in investing according to sharia are free from elements of usury, uncertainty (gharar), gambling (maysir), haram, and syubhat. Bond is one form of investment, but the practice of conventional bonds is usury which is clearly forbidden by the verses of the Qur'an and hadith Saheeh and consensus (ijma ') of the scholars both salaf and khalaf. The reconstruction of bonds to conform to sharia principles needs to take into account some of the underlying prohibitions with bonds. Basically the fundamental difference between sharia bonds and conventional bonds lies in the determination of interest rates of magnitude determined at the beginning of the transaction. Syariah bonds are not a fixed interest-bearing debt as contained in conventional bonds, but rather are fund-raisers based on the principle of profit-sharing. The transaction is not a debt of accounts receivable but an inclusion. Sharia bonds (sukuk) as a form of financing and investment allow some form of structure that can be offered to avoid usury. Sharia bonds can be profit sharing based on mudharabah / muqaradhah / qiradh or musyarakah. While margin / fee based on murabaha or salam or istishna '.

In vitro antibacterial effectiveness of three different dentin bonding systems against Streptococcus mutans and Enterococcus faecalis

Aims: This study aims to evaluate the antibacterial effect of three different bonding systems – G-Bond, Clearfil SE Bond and Prime and Bond – on Streptococcus mutans and Enterococcus faecalis in vitro. Materials and Methods: This study examined the antibacterial effectiveness of dentin bonding systems against S. mutans and E. faecalis. This study was carried out with the standardized inoculums with selective media and the materials assayed were straight away applied on the cultures. Discs of dentin bonding system (4 mm × 4 mm) were made, cured, washed and put on the bacterial inoculums for 24, 48, and 72 h and the growth inhibition was evaluated using a spectrophotometer. The dentin bonding agents evaluated in this study revealed different inhibitory effects. Statistical Analysis Used: Submitted to the analysis of variance. Results: Group A (G-Bond) has an inhibitory effect compared to Group B (Clearfil SE Bond) and Group C (Prime and Bond NT) at 24, 48, and 72 h against S. mutans. Group B (Clearfil SE Bond) has inhibitory effect at 24, 48, and 72 h compared to Group A (G-Bond) and Group C (Prime and Bond NT) against E. faecalis. Conclusions: This self-etching system G Bond and Clearfil SE Bond presented a greater inhibitory effect against S. mutans and E. faecalis than the conventional system, Prime and Bond did.

SEM Comparison of Penetration in Artificial White Spots Lesion between an Infiltrant Resin and Two Adhesive Systems

White spot infiltration emerged as an alternative of non-invasive treatment to halt progression of the lesion, through the use of low viscosity resins that would permeate the porous enamel and form a physical barrier that would prevent the acid diffusion produced by micro-organisms. Purpose: To compare penetration levels in artificial white spot lesions, of infiltrant resin ICON™ and 2 conventional adhesives systems, XP-Bond™ and Single Bond 2™. Methodology: White spot lesions (ICDAS code 2) were caused in 75 premolars or third molars were extracted in good conditions, by immersion in a 0.1 M lactic acid solution (pH 4.5) at 37℃ for 8 weeks. They were divided randomly into 3 groups of 25 samples and applied the following resins, Group A: ICON™, B: XP-Bond™ and C: Single Bond 2™. Subsequently, the enamel was removed with hydrochloric acid to expose resin saturated area and the samples were metalized with Au-Pd for SEM observation. The resin tags lengths were measured on microphotographs through software, and the values were analyzed with the statistics ANOVA and Scheffe post-test. Results: There were significant differences (p ™ (82.7 μm ± 26.8 μm) compared to adhesive systems XP-Bond™ (58.5 μm ± 29.3 μm) and Single Bond 2™ (44.8 μm ± 32.5 μm). We found no significant differences between the two adhesive systems (p > 0.05). Conclusion: Under the conditions tested, the penetration of infiltrant ICON was significantly higher than the adhesive systems; however, it removes the surface layer of the enamel.

Do regional and global uncertainty factors affect differently the conventional bonds and sukuk? New evidence

In this paper, we contribute to the on-going discussion on whether Islamic bonds (sukuk) are different from conventional bonds. We investigate the impact of regional and global uncertainty factors including financial and economic uncertainty on conventional bonds and sukuk returns dynamics. Using quantile regression approach for the period from January 2010 to December 2014, empirical results show independence between sukuk returns and global and regional economic policy uncertainty for all the quantiles, but causality relationship when the market is bearish. However we find co-movement and causality relationship between conventional bond market and global financial and economic uncertainty factors. For comparison purpose, we examine the impact of global and regional uncertainty factors on the sukuk returns in the case of the largest country sukuk market in the world which is for Malaysia. Our findings confirm that sukuk are different than conventional bonds in term of co-movement with global and regional uncertainty factors and these two assets are complementary and not substitutes.

The Green Bond Premium

Through a matching method, we estimate and analyze the green bond premium, defined as the difference in yield between a green bond and an equivalent synthetic conventional bond expressed as a percentage of the conventional bond yield. For the sake of accuracy, we focus our analysis on 118 green bonds issued worldwide. The average green bond premium is found to be negative from the green bonds' issuance date to August 31, 2016, notably in several segments, such as bonds with a rating strictly below AAA (-6.70%) and those emitted in Euros (-8.47%). The rating is the major driver of the green bond premium: the riskier the bond is, the greater the negative premium will be. The currency in which bonds are issued also contributes to the value of green bond premia. We conclude that regulatory and fiscal measures need to be introduced to keep on increasing the pipeline of green bonds issued and creating incentives for investing in green debt.