Friday February 15, 2013
Sukuk yield at August high as stocks gain
KUALA LUMPUR: Malaysia’s eight-year dollar sukuk rose to 3%, a level not seen since August, as an improving global economic outlook attracted investors to stocks.
The yield on the 4.646% notes due July 2021 has climbed 36 basis points this year after falling 116 basis points in 2012, according to data compiled by Bloomberg. The Bloomberg Malaysian Sukuk Ex-MYR Index of global Islamic debt declined 0.2%, while the MSCI Asia Pacific Index of equities rallied 3.3%.
Redemptions from foreign-currency bond funds rose to a seven-month high in the week ended on Feb 6, according to researcher EPFR Global, after the International Monetary Fund forecast last month that world economic growth would accelerate from 3.2% in 2012 to 3.5% this year and 4.1% in 2014.
The Malaysian yield was tracking debt from the United States, where the rate on 10-year Treasuries had advanced 30 basis points, said Suzaizi Mohd Morshid, head of treasury at RHB Islamic Bank Bhd, a unit of RHB Capital Bhd.
“There’s a good chance the Malaysian 2021 global sukuk yield could test 3% this quarter,” he said in an interview in Kuala Lumpur yesterday.
The average yield on global syariah-compliant notes rose 12 basis points, or 0.12 percentage point, this year to 2.93% on Feb 12 and touched a four-month high of 2.98% on Feb 4, according to the HSBC/Nasdaq Dubai US Dollar Sukuk Index. The premium investors demand to hold the debt over the London interbank offered rate, or Libor, narrowed 13 basis points to 169 basis points.
The yield on 10-year Treasuries exceeded 2% on Feb 1, for the first time since April, on the same day that a manufacturing index in the world’s largest economy beat estimates to reach a nine-month high in January. The rate rose three basis points to 2.06% yesterday. The Malaysian eight-year yield advanced four basis points to 3% yesterday, the highest since Aug 22. — Bloomberg
“The encouraging economic data coming out from the United States has put pressure on the longer-dated US Treasury notes, dragging Malaysia’s 2021 dollar sukuk along with it,” Johar Amat, the Kuala Lumpur-based head of treasury at OCBC Al Amin Bank, the Islamic unit of Singapore’s Oversea-Chinese Banking Corp, said in a Feb 13 e-mail interview. — Bloomberg