Sukuk pipeline for this year looks promising | GulfNews.com

Sukuk pipeline for this year looks promising | GulfNews.com:



"The Sukuk market, and fixed income market as a whole in the GCC, does not have the same feel it had last May. Whilst spreads are actually tighter than last May, this is not the sole reason for the formation of a bubble.



Firstly, in the sukuk world, there is simply nowhere near enough supply of sukuk to meet the ever-growing demand. If anything, this will actually worsen as we lose some names later this year, such as TDIC and GE.



Secondly, the economic back drop is very different to a year ago. Dubai has shown great strength, and in winning the Expo 2020, has pretty much secured economic strength for the next six to seven years. Having said this, we don’t see the market tightening any further from here for the short term, particularly with the summer months and Ramadan fast approaching. I expect that things will simply tick over and pretty much follow US Treasuries and US swap rates. I can see 10-year US Treasuries in particular range between a low of 2.50 per cent and a high of 3 per cent for the short to medium term. All of this should give some stability to sukuk prices over the coming months rather than a May sell-off, as we saw in 2013."



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