Emaar’s Bond Yields Inverted on Demand for Sukuk: Arab Credit - Bloomberg

Yields on Dubai developer Emaar Properties PJSC (EMAAR) longer-maturity bonds dropped below its shorter- dated securities in September as investors preferred Islamic bonds, which are in shorter supply.

Emaar’s Islamic bond, or sukuk, due 2016 yielded at 7.99 percent yesterday, while its convertible bond due 2015 was available at 8.58 percent, according to data compiled by Bloomberg. Yields on bonds of utility Dubai Electricity & Water Authority have also inverted since August, with its 2016 security trading at a yield of 5.23 percent yesterday and its 2015 bond at 5.74 percent. Yields on bonds with shorter maturities are usually lower than on similar longer-dated paper.

“The Emaar 16s are rated while the 15s are not, which immediately excludes a lot of managers from owning the 15s,” Usman Ahmed, the head of fixed income at Emirates NBD Asset Management Ltd. said by phone on Oct. 25. “Then the 16s are sukuk and the 15s are convertibles. There’s a great deal of demand for sukuk assets, but not enough supply.”

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