Sukuk Trails Emerging Debt for Fourth Month as Trade Ebbs: Islamic Finance - Bloomberg

Islamic bonds lost to emerging- market debt for the fourth month in August and fund managers say returns won’t catch up until trading increases and Persian Gulf companies restructure their debt.

Shariah-compliant notes rose 1.4 percent last month, down from 2.6 percent in July, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. They have underperformed emerging-market bonds for the longest stretch since July 2009. Debt in developing nations climbed 2.4 percent, adding to the 4.1 percent return in the prior month, JPMorgan Chase & Co.’s EMBI Global Diversified Index showed.

Sukuk won’t close the gap until investors gain confidence in the global economy and creditworthiness in the Gulf improves, according to Nomura Islamic Asset Management and Aberdeen Asset Management Plc. New sales after the Muslim fasting month of Ramadan ends in mid-September will help boost trading, said CIMB-Principal Islamic Asset Management Bhd. and Exotix Ltd.