Islamic bonds are outperforming emerging-market debt for a second month as new note sales rebound, Malaysia boosts spending on roads and power plants and confidence returns to the Persian Gulf.
Global Shariah-compliant notes returned 1.45 percent in December, the HSBC/NASDAQ Dubai US Dollar Sukuk Index shows, while bonds in developing regions fell 0.7 percent, according toJPMorgan Chase & Co.’s EMBI Global Diversified Index. Emerging- market returns have dropped as rising yields on U.S. Treasuries gave dollar-based investors less incentive to buy riskier fixed- income assets.
Islamic debt sales increased 34 percent in the second half compared with the first six months as investor confidence was boosted by Dubai World’s September agreement with most of its creditors to restructure $24.9 billion of debt. Developing nation bond funds suffered net outflows for three consecutive weeks until Dec. 8, the longest stretch since the first quarter of 2009, according to Cambridge, Massachusetts-based research firm EPFR Global.
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