Islamic bonds are tumbling, sending Arabian Gulf yields to a six-week high, as concern political unrest in Egypt will spread pushes up the cost of crude and threatens the global economic recovery.
Average yields on Sharia-compliant sukuk from the six-nation Gulf Cooperation Council jumped 28 basis points since January 27 to 5.59 percent yesterday, according to the HSBC/NASDAQ Dubai GCC US Dollar Sukuk Index. The extra yield investors demand to hold emerging-market debt over US Treasuries widened 24 basis points over the past two days to 270, the highest level since November 30, JPMorgan Chase & Co’s EMBI+ Index showed.
“Investors are jittery and are waiting to see how quickly the crisis in Egypt is resolved,” Muhammad Asad, who oversees $210m of Sharia-compliant funds as chief investment officer at Al Meezan Investment Management Ltd, Pakistan’s biggest Islamic fund, said in an interview yesterday. “It cannot be allowed to linger on or it may have long-term effects on the Islamic market in the Middle East.”
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