Islamic bond yields dropped to a seven-year low and investors predict further declines as growth in Asia and the Gulf that’s outpacing the rest of the world shores up demand for sukuk.
Average yields fell five basis points, or 0.05 percentage point, in July to 3.39 per cent, approaching the lowest level since January 2005, when they reached a record 3.33 per cent, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index.
South Korea unexpectedly cut interest rates last week, after central banks in China, the US and Europe eased monetary policy, prompting fund managers to hunt for higher-yielding assets. Sukuk sales have climbed 73 per cent in 2012 to $26.8 billion (Dh98.4 billion) from the same period last year as the decline in borrowing costs encouraged issuers such as Qatar and Dubai-based Emaar Properties PJSC to tap the market.
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