Trouble is once again brewing in the market for Shariah-compliant bonds, known as sukuk.
In fact, the trouble is coming from the same entity that crashed the sukuk market about 4 years ago: the UAE’s Nakheel, which defaulted on a sukuk payment back in 2009.
Note that the financial jihadis are trying to blame it all on the US Federal Reserve, but they weren’t complaining when the US Fed was priming the money pump and, moreover, not everyone’s bonds are struggling like that of Nakheel:
Emaar Properties’ and Nakheel’s Islamic bonds posted their worst monthly drop on record in June as investors dumping emerging-market assets sold off debt linked to Dubai’s real-estate recovery. Emaar’s 2016 sukuk yield soared 153 basis points, or 1.53 percentage points, during the month to 5.25 per cent, more than double the average yield jump for Gulf Cooperation Council (GCC) Sharia-compliant debt tracked by HSBC/Nasdaq Dubai indexes. Nakheel’s bonds due the same year yielded 9.95 per cent on June 28, up 179 basis points, data compiled by Bloomberg show.
Investors cut holdings linked to Emaar, developer of the world’s tallest tower, and Nakheel, which built an artificial island shaped like a palm frond off the emirate’s coast, amid an emerging-market rout triggered by Federal Reserve plans to trim its bond-buying programme.