A spectacular rally in Dubai-linked Islamic bonds is pushing yields to record lows and influencing prices in the entire Gulf debt market. Some investors think the rally has reached excessive proportions, potentially setting bonds up for a partial pull-back when the euphoria starts to fade.
Dubai's $1.25 billion sovereign sukuk, issued at a profit rate of 6.396 percent in November 2009 and maturing in 2014, was yielding just 3.2 percent on Wednesday, for example.
That is a yield plunge of about 2.35 percentage points since early February -- an impressive gain for any credit and especially for Dubai, which until recently was seen as the ugly duckling of the Gulf because of its 2009 corporate debt crisis.
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