Despite increased economic turmoil over the past few years, the Islamic financial sector including sukuk has shown tremendous growth and stability. This study examines the yield spread determinants of sukuk and conventional bonds. We comparatively assess the effects of firm- and industry-specific variables, bond characteristics, and macroeconomic conditions on the yield. Our sample data features bonds and sukuk of different maturities issued by 58 publicly traded (listed) firms in Malaysia. For sukuk, primary determinants are the firm-specific indicators which indicate lower yield spreads. Moreover, sukuk spreads do not widen with equity volatility, making them less risky than conventional bonds. For conventional bonds, both firm-level and bond-specific characteristics significantly affect yield spreads. Higher financial leverage with shorter maturity is associated with low yields and low spreads. Findings in this study present new insights and important policy implications for investors trading in and regulators governing sukuk and conventional bonds.