Sales of bonds that comply with Islamic laws will remain “weaker” this year as investors shun riskier, higher-yielding assets on concern governments will struggle to repay debt.
Sales of the bonds known as sukuk have totalled $564 million so far this year, compared with $2.5 billion for the first quarter last year, according to data compiled by Bloomberg.
Sukuk sales have slowed as the market faced numerous defaults and debt restructurings, including November’s “payment delay” by Dubai World.
Moody’s Investors Service said United Arab Emirates banks are owed about 55 billion dirhams ($15 billion) by Dubai World. Gulf region banks are poised for “another difficult year,” Standard & Poor’s said yesterday, as they grapple with bad loans and the fall-out from the global financial crisis.
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