SUKUK: UNVEILING THE STRUCTURAL UNDERPINNINGS, YIELD SPREAD DYNAMICS, AND COMPARATIVE ANALYSIS WITH CONVENTIONAL BONDS IN THE INDONESIAN FINANCIAL LANDSCAPE

Risna Triandhari Triandhari; Natasya Nisaul Alfani; Raden Parianom

doi:10.33102/2vk7az15

Authors

Risna Triandhari Triandhari Department of Economics, Faculty of Economics and Business, Universitas Indonesia Author
Natasya Nisaul Alfani Center for Islamic Economics and Business, Universitas Indonesia Author
Raden Parianom Faculty of Economics and Business, Universitas Pembangunan Nasional Veteran Jakarta Author

DOI:

https://doi.org/10.33102/2vk7az15

Keywords:

Sukuk, Conventional Bonds, Sukuk Ijarah, Sukuk Mudarabah, Yield Spread

Abstract

This study delves into whether factors influencing credit spreads differ between sukuk and bonds within the vibrant Indonesian secondary market. The research leverages unbalanced panel data encompassing 2017-2023, meticulously obtained from Thomson Reuters Eikon and CEIC. To extract meaningful insights, a Fixed-Effect Model analysis is employed, a robust technique for handling this type of data. The study further conducts a partial analysis to recognize the potential heterogeneity within the sukuk market. This analysis explores explicitly whether the factors driving yield spread exhibit variations between sukuk structured under the ijarah and mudharabah principles. The study's core finding challenges the notion that investors perceive sukuk as a perfect substitute for conventional bonds in terms of the risk-return profile. This is evidenced by the high degree of similarity in the factors that influence the credit spreads of both instruments. However, a fascinating discovery emerges from the partial analysis. It reveals that mudharabah sukuk stands out as a distinct product within the Indonesian secondary debt market compared to its ijarah counterpart. This finding warrants further investigation into the specific characteristics of mudarabah sukuk that contribute to its distinctiveness.

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