The month-long rally in Malaysia’s sovereign Islamic bonds is paving the way for a revival in issuance of Shariah-compliant debt.
The yield on the government’s 3.928 percent dollar sukuk due in June 2015 fell to 2.89 percent, down 35 basis points from a five month-high of 3.24 percent on Dec. 15, Royal Bank of Scotland Group prices show. The rate on state-run oil company Petroliam Nasional Bhd.’s 4.25 percent notes due in August 2014 dropped 44 basis points over the same period to 2.75 percent.
Malaysian sukuk recovered as concern over Europe’s debt crisis eased and Dubai’s debt restructuring allowed for new issuance of debt that meets Islam’s ban on interest. Dubai plans to sell bonds this year in Malaysia, strengthening Kuala Lumpur’s role as a global hub for Islamic finance. Emaar Properties PJSC, the developer of the world’s tallest tower in Dubai, set up a $2 billion Islamic bond program, according to a prospectus obtained by Bloomberg this week.
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