Islamic bonds from the United Arab Emirates are poised to extend gains after climbing to a record last week, buoyed by progress in debt restructuring and a pickup in appetite for high-yielding assets in the Persian Gulf.
The HSBC/NASDAQ Dubai UAE US Dollar Sukuk Index, which tracks 10 sovereign and corporate securities, climbed to 131.15 on Jan. 4, the highest since HSBC started tracking their performance in January 2005. The notes returned 16.5 percent last year after a gain of 23 percent in 2009, the index shows. Shariah-compliant debt sold by Dubai issuers will gain between 6 percent and 7 percent in 2011, outpacing counterparts in the Persian Gulf, according to Dubai-based Mashreq Capital DIFC Ltd.
Dubai World, one of Dubai’s three main state-owned holding companies, received approval from its creditors in October to change terms on $24.9 billion of loans. Nakheel PJSC, a property unit of Dubai World seeking to delay payments on at least $10.5 billion of debt, said Dec. 30 it received funds from the Dubai government to repay Islamic bonds maturing this month.
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