Anita Yadav - Head of Fixed Income Research
Athanasios Tsetsonis - Sector Economist
Published Date: 13 November 2017
Expectations of current strong economic growth in the US fueling higher inflation in the future caused US treasury yields to shift upwards and UST curve to steepen during the month. This in turn has caused yields on dollar denominated sukuk to rise and prices to fall. Emirates NBD iBoxx Sukuk Total Return Index fell to 117.41 as at 10 Nov 2017 from 118.08 at the beginning of the month.
Monthly total return on the index is -0.70%, however YTD return remains healthy at 3.95%. This is largely attributed to coupon collection as clean price gain on the index has only been about +0.65% since the beginning of this year.
GCC based sukuk have had to balance the positive of rising oil prices with negatives of increasing geopolitical tension in the region. However given the presence of several global non GCC sukuk in the index, overall performance has been mixed and varied.
Looking at current yields on issuers in the universe of USD denominated, internationally tradable sukuk we make following relative value observations:
Relative Value in Sukuk
GCC Bond Market In Search of New Supply
US Core CPI ticks up in October