INDONESIA - CAPITAL MARKETS - Indonesia Company Sukuk Shortage Curbs Returns: Islamic Finance

www.thejakartaglobe.com - Indonesia’s three best-performing Islamic bond funds say a rebound in corporate sukuk sales is failing to keep up with demand from investors chasing higher returns as government yields decline.   

Insight Investments Management’s top-ranked I-Hajj Syariah Fund wants to boost company holdings from 80 percent if more securities become available, President Director Tony Henri said in an interview in Jakarta last week. Akbar Syarief, fund manager at MNC Asset Management, overseeing the second-best performer, said his confidence in finding buyers is not matched by certainty there will be sufficient supply.   

“Right now the concern is that when money comes in, there may not be securities to invest in,” Jakarta-based Syarief, whose MNC Dana Syariah vehicle returned 3.8 percent this year, said in a June 26 interview. “Corporate sukuk will always be in high demand.”    (source)

CAPITAL MARKETS - Investors Turn Focus Toward Malaysia, Indonesia in Search of Higher Yields

Investors in Malaysia and Indonesia say they favor sovereign sukuk over a planned dollar issue by the Islamic Development Bank after government securities returned almost twice as much as the multilateral lender’s this year.

IDB’s 1.775 percent Shariah-compliant debt due October 2015 gained 1.1 percent. Indonesia’s 8.8 percent US currency sukuk maturing April 2014 returned 1.6 percent, while Malaysia’s 3.928 percent June 2015 note climbed 3.1 percent, prices from Royal Bank of Scotland Group show.  (full story)

CAPITAL MARKETS - Government’s First Infrastructure-Backed Sukuk Offer Welcomed

Indonesia’s first sale of local-currency sukuk backed by roads and railways may benefit from the rupiah’s 4.7 percent gain against the US dollar this year and higher sovereign debt yields relative to Malaysia.

“I’d buy the sovereign sukuk as I believe the rupiah has more room to strengthen,” Mohd Noor Hj A Rahman, chief executive at OSK-UOB Islamic Fund Management, said on Thursday. “Yields are more attractive if you compare to what other markets are offering. You can’t get such high yields in Malaysia.”  (full story)

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.

MICRO FINANCE - Ministry has high hopes for sharia microfinancing

The government forecasts a rapid growth in assets managed by Indonesian sharia-based microfinancing institutions, or baitul maal wat tamwil (BMTs), on the back of rising public trust, a minister said.