Petronas Sukuk Stage Record Rally on DBS, Fidelity Demand: Islamic Finance - Bloomberg

Petroliam Nasional Bhd.’s Islamic bonds are set for a second straight record gain this month, luring funds without religious requirements from the U.S., Europe and Israel.

The yield on Petronas’ 4.25 percent notes maturing in 2014 dropped 40 basis points in July to 3.13 percent and reached the lowest level since the bonds were sold in August 2009, prices from Royal Bank of Scotland Group Plc show. They returned 6 percent this year, 1.7 percent in July and 1.4 percent in June.

DBS Asset Management Ltd. of Singapore, Fidelity Investments in Boston, Massachusetts, and Frankfurt-based Union Investment, which don’t specialize in Islamic debt and aren’t bound by the religion’s ban on interest, are snapping up bonds of Malaysia’s biggest oil company, Bloomberg data show. The funds profited as Asia led the world out of recession, narrowing premiums demanded to hold both sukuk and emerging-market debt.