The “conventional wisdom” of indicative sukuk pricing

One of the most known misconception among prospective issuers (in the emerging & frontier markets) that sukuk pricing differs from bonds. Well, it is not! Debt Capital Market Bankers use the same conventional wisdom for pricing of bonds. Knowing the indicative pricing is the most decisive factor for reluctant issuers who weigh the other option of using loans or bonds.

Know-how

Depending on the initial term length (tenor), a relative benchmark would be used for the Sukuk pricing. The size of the spread is denominated in basis points (bps) and it varies according to the risk of the borrower. The relative value of indicative pricing is driven by the following: