Islamic bonds issued by financial services companies in the Persian Gulf are heading for their best year on record on prospects of debt restructuring and demand for higher-yielding assets in emerging markets.
Shariah-compliant debt from financial institutions in the six-nation Gulf Cooperation Council returned 15.7 percent so far in 2010, HSBC/NASDAQ Dubai GCC Financial Services US Dollar Sukuk Index shows, the most since HSBC started tracking their performance in July 2005. DIFC Investments LLC’s floating-rate note maturing in June 2012 gained 29 percent in price terms to 82.8 cents on the dollar, according to Bloomberg data. The 3.172 percent sukuk due September 2014 sold by Islamic Development Bank, a Jeddah-based multilateral lender, returned 9.9 percent, prices provided by Royal Bank of Scotland Group Plc show.
State-owned Dubai World reached an agreement with creditors in September to alter terms on $24.9 billion of borrowings, reducing the risk the state-owned company will default and bolstering investor appetite for debt from the region. Economic growth in the GCC will accelerate to 4.5 percent this year and 5.9 percent in 2011, from 0.4 percent last year, the International Monetary Fund said in its October Regional Economic Outlook report.
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