Home » wire - Sukuk Spread at Six-Week High on Market Turmoil

12/08/2011 02:24:57 PM GMT   Comments ()     Add a comment   Print     E-mail to friend

 Relative yields on Sukuk are climbing to the highest in more than six weeks as mounting evidence the global economic recovery is in danger spurs investors to flee riskier assets. The difference between average yields for Shariah-compliant notes and the LIBOR widened 38 bps, this week to 252, the biggest gap since June 27, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. Sukuk in Indonesia and Dubai fell as investors sold assets with the lowest credit ratings on concern Europe’s sovereign debt crisis will spread. The difference in yields between Malaysia’s US dollar investment-grade 3.928 pct 06/2015 and Dubai’s unrated 6.396 pct 11/2014 climbed 14 bps yesterday to 260, data compiled by Bloomberg show. Investors will favor higher-rated Sukuk such as those issued by Malaysia and Abu Dhabi until markets stabilize, according to Bank Muamalat Malaysia Bhd. and PT MNC Asset Management in Jakarta. The market will likely be erratic in the next few weeks until there is a clearer picture from the U.S. or Europe and funds will probably be looking to re-balance their portfolios and seek safer alternatives. The upheaval in world markets may also discourage Sukuk issuance, according to Bahrain-based Unicorn Investment Bank BSC. omar1.1

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