“2012 may be the year of the Sukuk; in its longest rally since August 2011. On average yields dropped 21 basis points (bps) to 3.72% and touched a four-month low of 3.71% on the 7th March 2012, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index,” commented Markaz Research in a report.
The HSBC/Nasdaq index also showed the spread between average yields on global Sukuk and the Libor narrowed five bps to 267 bps on the 8th March; the tightest since November last year.
“Ample liquidity at Islamic financial institutions, the markets’ revaluation of the European debt crisis and US growth prospects boosted appetite for risk assets everywhere,” Mohieddine Kronfol, chief investment officer of Franklin Templeton Investments (ME) was quoted as saying.
Nonetheless, the Sukuk market’s performance remains hindered by undersupply, despite issuances already almost doubling in value in the year-to-date compared to the same period last year. Malek Khodr Temsah, the assistant vice-president of treasury and investment at Al Baraka Banking Group, noted that until Sukuk sales pick up further, the lack of Sukuk will continue to benefit the secondary market.
source: Islamic Finance News