Yields on GCC sukuk appear to be consolidating at historic lows. Low interest rates worldwide and investors' preference for the bond markets - over still-depressed equity markets - largely explain the trend. The tight yields also indicate continued strong investor demand for all manner of fixed-income products in the GCC, despite the financial woes in Dubai and political troubles in Bahrain from 2008 to 2011. Although not specific to the GCC, demand is also coming from international investors and sukuk funds in the region. Not only have yields plunged on GCC sukuk, they've turned convincingly lower than yields on conventional bonds. As a result, the debt market may continue to see more sukuk than conventional fixed-income issuance, as it did for the first time in 2012.
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