Sukuk Trails Emerging Debt as Falling Issuance Saps Trade: Islamic Finance - Bloomberg

Yields on Islamic bonds rose this week by the most in almost a month, extending two quarters of underperformance relative to emerging-market securities, on concern slumping sales will reduce trading.

Yields climbed 10 basis points to 4.59 percent this week, the biggest increase since the five-days ended Oct. 22, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. Bonds in developing nations outperformed Shariah-compliant notes for the last six months as global sales of sukuk dropped 29 percent to $13.7 billion.

“It will be very difficult for sukuk to catch up,” Mohd Noor Hj A Rahman, head of the Islamic fund management unit at OSK-UOB Unit Trust Management Bhd. overseeing about 250 million ringgit ($81 million) of Shariah-compliant assets in Kuala Lumpur, said in an interview yesterday. “It’s an issue of liquidity and investors want to be able to trade the securities.”