The cost of insuring Islamic bonds has risen to a six-week high as global financial turmoil threatens a regional recovery in the sukuk market.
Uncertainty created by the market volatility combined with the traditional summer slowdown is likely to deter new sales, say analysts. 'It's sentiment driven,' said Nida Raza, the senior vice president of capital markets at Unicorn Investment Bank of Bahrain. 'Banks are pricing yields higher as they look at bond markets as a whole and are seeing the cost of risk going up.'
Islamic bonds in Dubai have dropped as investors flee lower credit-rated assets linked to concerns about an escalation of the US and European debt woes.
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