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Anita Yadav - Head of Fixed Income Research
Published Date: 05 March 2019
The month of February saw a shift in the tone of discussions between the US and China from trade-wars to trade-peace. In addition, the 4Q GDP growth in the US came in stronger than expected, thereby presenting a case for higher yields. Yields on 2yr, 5yr and 10yrs US treasuries closed the month at 2.51% (+5bps, m/m), 2.51% (+7bps, m/m) and 2.62% (+9bps, m/m).
Despite higher benchmark yields, most bond and sukuk portfolios did reasonably well as credit spreads tightening generally counterbalanced the benchmark yield widening. The total return on Emirates NBD Markit iBoxx USD Sukuk index in February was a gain of 0.76% of which +0.46% came from capital gains and remainder from coupon collection.
Based purely on trading yields on various sukuk as at the end of February, following relative value observations are made:
Source: Markit, Emirates NBD Research
Performance of GCC bonds and sukuk in 2018
Global Sukuk: Relative Value
From LIBOR to SOFR
Interest Rates Monitor