Dubai Sukuk Premium to Malaysia Falls to Record

The yield premium investors demand to hold Dubai’s unrated Islamic bonds over Malaysia’s tumbled as much as 50 percent this year to a record as the emirate’s state-linked companies settle debt and economic growth accelerates.

The spread on Dubai’s 6.396 percent sukuk due November 2014 over Malaysia’s investment-grade 3.928 percent notes maturing in June 2015 fell 137 basis points this year to 149 on Aug. 8, according to data compiled by Bloomberg. The premium reached a record 142 on July 30. The yield on the emirate’s sukuk dropped 234 basis points this year to 3.23 percent on Aug. 7.

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