Islamic bonds slumped last week by the most since May as Ireland sought aid to shore up its banking system, reducing demand for the yield premium available on sukuk and damping the outlook for new sales.
According to the HSBC/NASDAQ Dubai US Dollar Sukuk Index, the average yields climbed 22 basis points to 4.88 percent. Trading Volumes declines, as the holiday in the Persian Gulf from Nov. 15 to Nov. 18 to celebrate for the Muslim festival of Eid-al-Adha.
Sales of Islamic bonds, which pay asset returns to comply with the religion’s ban on interest, slumped this year due to debt restructurings and falling property prices in the Middle East.
Concerns on Europe’s debt and emerging markets have generally been affected by the slumped.
According to the HSBC/NASDAQ Dubai US Dollar Sukuk Index, the difference between the average yield for sukuk and the London interbank offered rate widened 8 basis points last week to 341 basis points, which the most since the week ended Oct. 22.
Based on the data compiled by Bloomberg, total sales of Islamic bonds dropped 29 percent to $13.7 billion this year. Sales of ringgit-denominated sukuk in Malaysia, the world’s biggest market for sukuk, fell 31 percent to 21.4 billion ringgit ($6.9 billion). Offerings from the six-nation Gulf Cooperation Council declined 36 percent to $3.97 billion.
(Source: Bloomberg)
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