Dubai sukuk demonstrations on the review of S & P, Qatar World Cup plans

Dubai Islamic bonds led a rebound in the Persian Gulf sukuk last week, ending the worst losing streak in 10 months, as Standard & Poor's raised its forecast for DP World, Ltd. and Qatar won the right to host the Cup World.

Average yields of Shariah-compliant bonds of the Gulf Cooperation Council declined 13 basis points, or 0.13 percentage point to 5.71 percent on Dec. 10, according to the HSBC / GCC sukuk Dubai NASDAQ Dollar Index . The performance of DP World's note 6.25 percent Notes due July 2017 fell 19 basis points last week to 6.96 percent, data compiled by us. Yields of sukuk sold by Indonesia and Malaysia rose, tracking U.S. Treasuries.

S & P revised the ratings outlook on the fourth largest ports operator in the world to "stable" from "negative" on December 2, citing improved financial performance and debt restructuring at its parent, Dubai World. winning bid for Qatar's perspective is to attract international investment and a rally in oil prices bode well for economic growth in the region, according to Manama Bahrain based Islamic Bank.

"There is a general upturn in the regional risk appetite," said Hussain Albanne, head of operations in Bahrain Islamic bond, in an interview on 09 December. "There is optimism in Qatar victory will create a boom in construction and extend to the Gulf. I still think there is much of value in regional sukuk."

"Risk Factors"

Investors also sought relatively higher yields as the extension of President Barack Obama for U.S. tax cuts increased appetite for riskier assets.

The performance of the Dubai Department of Finance of 6.396 percent bonds due in November 2014 Islamic fell 16 basis points last week to 6.61 percent, the first decline in five weeks.

"There is international interest in buying Dubai names," said Louis Najem, a bond trader sales Rasmala European Investment Bank in Dubai, in an interview on 09 December. "The idea is that more for your money when you consider relevant risk factors."

More money can flow into the Persian Gulf after Qatar, won the bid to host World Cup in 2022 and the Malaysian ringgit back of a hedge fund 13 years of signals can leave the Southeast Asian nation, the time, according to OSK-UOB Unit Trust Management Bhd

"Hot money"

"This is the hot money that was once the bond money and made money from the currency, to go," said Mohd Noor Hj A Rahman, head of fund management unit of Islamic OSK-UOB Unit Trust, in an interview from Kuala Lumpur, 09 December. "The Gulf market is attractive after Qatar won the rights to the World Cup."

State-owned Dubai World agreed in September with most of its creditors to restructure $ 24,900,000,000 of debt. Sales of Shariah-compliant bonds, which pay returns on the asset base to comply with Islam's ban on interest, was reduced this year as the debt restructuring in the Middle East demand for pressing.

global emissions fell 27 percent to $ 14.5 million in 2010 from a year earlier, compared with a record 31 billion dollars sold in 2007. Offerings of the six GCC countries dropped 34 percent to $ 4.4 billion.

Indonesia, Malaysia Drop

The difference between the average yield of sukuk and interbank offered rate in London fell 32 basis points last week to 315, according to HSBC / Index NASDAQ sukuk. In the GCC, including Qatar, the UAE and Kuwait, the gap narrowed by 32 basis points to 389.

Islamic notes returned 11.9 percent this year, according to the HSBC / NASDAQ U.S. Dollar Dubai sukuk index. Bonds in developing markets rose 13 percent, JPMorgan Chase & Co. 's EMBI Global Diversified index shows.

The yield on the note of Malaysia Islamic percent of 3,928 due June 2015 rose 22 basis points last week to 3.14 percent, according to prices provided by Royal Bank of Scotland Group Plc. The bonus rate of Indonesia's 8.8 percent due April 2014 rose 18 basis points to 3 percent.

The extra yield investors demand to hold sukuk Dubai government in place in Malaysia fell 36 basis points to 345 last week, at least two months. The difference with DP World's debt fell 39 basis points to 379 and touched the lowest since the Malaysian sukuk sold in early June.

'Superior' Ratings

Malaysia is rated A-by S & P, the fourth lowest investment grade, while Indonesia and DP World both have ratings of BB, two levels below investment grade. Dubai Department of Finance has not been rated by either S & P or Moody's Investors Service.

"Malaysia and Indonesia are considered more superior credit and thus their yields are closely related to U.S. Treasury bonds," Usman Ahmed, a senior fund manager at Emirates NBD Asset Management, which oversees $ 300 million in bonds to drive UAE's largest lender, said in an email response to questions submitted by December 9.