Sovereign Islamic bonds from Asia to the Persian Gulf are beating returns on corporate sukuk for the first time in three months as accelerating economic growth and rising oil revenue shore up state finances.
Government debt that complies with the religion’s ban on interest gained 1.7 percent so far this month, according to the HSBC/NASDAQ Dubai Sovereign US Dollar Sukuk Index, more than the 1.1 percent advance in bonds issued by companies. The last time the sovereign notes performed better was in May, when they dropped 0.5 percent compared with a loss of 2.3 percent on corporate debt.
Malaysia’s Lembaga Tabung Haji fund, France’s BNP Paribas Investment Partners and Duet Mena Ltd. in Dubai forecast government debt will outperform until property prices in the Persian Gulf recover from a slump that prompted credit-ratings companies to downgrade corporate bonds. Average oil prices of $78 a barrel will support fiscal surpluses in the Middle East this year, Moody’s Investors Service said on Aug. 3.
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