CAPITAL MARKETS - Malaysia beats Indonesia on sukuk safety

Malaysia’s dollar Islamic bonds are giving twice the returns of those in Indonesia this year as investors seek investment-grade assets amid unrest in the Middle East and Europe’s escalating debt woes.

Malaysia’s 3.928 per cent sukuk maturing in June 2015 gained 1.9 per cent this year through April 19, according to prices from Royal Bank of Scotland Group. Indonesia’s 8.8 per cent note due April 2014 climbed 0.8 per cent, RBS data show. Malaysia is rated A- by Standard & Poor’s, the fourth-lowest investment level, while Indonesia is rated BB+, one level short of the top grades. (full story)

CAPITAL MARKETS - Sukuk Spreads Tighten as RI Gears Up for 2011 Bond Issue

Indonesia’s borrowing costs relative to Malaysia’s have narrowed to the lowest level since January ahead of a planned sale of global Islamic bonds in the second half of this year.

The extra yield investors demanded to buy Indonesia’s 8.8 percent dollar sukuk compared with Malaysia’s 3.928 percent note shrank to 21 basis points on Friday from 71 basis points on March 16. (full story)

SUKUK - Sukuk Four-Year Low Yields Fail to Deter Funds: Islamic Finance

Aug. 20 (Bloomberg) -- Islamic bond yields at four-year lows are failing to deter investors amid a flagging global recovery and dwindling new issuance of sukuk.

The average yield on dollar-denominated notes that comply with religious principles from Dubai to Malaysia fell 25 basis points, or 0.25 percentage point, so far this week to 5.22 percent, the lowest level since November 2005, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. The yield has dropped 204 basis points this year.