Islamic Debt to Stay ‘Weaker’ Amid Failings, Deutsche Bank Says

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Sales of bonds that comply with Islamic laws will remain “weaker” this year as investors shun riskier, higher-yielding assets on concern governments will struggle to repay debt.

Sales of the bonds known as sukuk have totalled $564 million so far this year, compared with $2.5 billion for the first quarter last year, according to data compiled by Bloomberg.

“Until we see risk sentiment improve globally it’s very difficult to see that the sukuk market will be as vibrant as it used to be,” Hussein Hassan, head of structuring for Middle East and Africa at Deutsche Bank AG, said at a conference in London today. “The industry failed to rise up to the occasion when looking for solutions. When Islamic finance was in the public eye, we were unable to provide solutions.”