Islamic finance has grown at a tremendous pace over the past 12 months. The asset-backed securities market has grown fourfold, with $6.7 billion of Islamic bonds – or sukuk – launched in 2004, up from $1.9 billion in 2003. And judging by the number of deals currently in the pipeline, the market could top $10 billion this year.
This growth has sparked a greater need for a wide array of hedging instruments from both issuers and investors. But there lies the problem – under sharia (Islamic law),