FINANCIAL MARKETS - SUKUK - Best Indonesia Sukuk Fund Expects Rating Boost on Returns: Islamic Finance

Indonesia’s Islamic bonds may extend this year’s rally that drove yields to record lows on the prospects of further ratings upgrades, according to the manager of the world’s best-performing sukuk fund.

PT Bhakti Asset Management’s BIG Dana Muamalah fund, which returned 13.4 percent this year, bought rupiah-denominated government sukuk in March, the same month Standard & Poor’s raised the nation’s rating to BB, two levels below investment grade. BIG Dana, the top performer in 2010 among 67 Shariah- compliant fixed-income funds tracked by Bloomberg, expects more Indonesian companies to sell Islamic bonds next year.