| Summary: | Halal investment in Islamic Capital Market (ICM) particularly for sukuk market is compulsory to all Muslim investor based on shariah principles. To make halal investment based on halal theory said that the instrument should be comprehensively comply with shariah principles include its characteristics or features. Therefore, the study is motivated to study the sukuk characteristics with its yields relationship since there are many study as discussed claimed that it was replicated to conventional bonds. This study uses secondary data. The data are gathered from various sources including central bank of Malaysia (Bank Negara Malaysia—BNM), Securities Commission (SC) and Bloomberg from year started in January, 2017 up to June, 2023 of 210 sukuk issuance. The results revealed the concept of the halal theory (issues of volatility, liquidity, riba and uncertainty) is significant to sukuk characteristics as represented by its tenure, coupon rate, bid and ask price, as well as amount of outstanding issue. Sukuk performance with regards to the yields are significantly affected by its characteristics even its applied similar features to conventional bonds where some of them for instance coupon rate did not comply with the requirements of Islamic principles as well as breached the shariah rulings for involving maisir or riba (charging an excessive interest rate). Thus, policymakers that involved in Islamic capital market needs to review their sukuk trading guidelines especially when considering credit enhancement involves a global capital market. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2025.
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