You can now track the sukuk market with this
dubai — Emirates NBD, Dubai’s largest lender, announced on Wednesday the launch of a Sukuk Index, covering 98 dollar-denominated sukuks from 61 issuers with a market value of over $90 billion.
The bank said the Emirates NBD Markit iBoxx USD Sukuk index captures sovereign, sub-sovereign and corporate sukuk from emerging and developed markets and will contain investment grade, sub investment grade and unrated securities which offer a broad representation of the global sukuk universe.
“Combining transparency, multi-dimensional analysis, independence and flexibility, the Index will provide an accurate and objective benchmark for Islamic finance investors,” said the lender.
Developed by Emirates NBD Group in collaboration with IHS Markit, the Emirates NBD Markit iBoxx USD Sukuk Index is a market-cap weighted index dedicated to capturing the performance of the sukuk market.
The banks said the index would be used for benchmarking, risk and performance analysis and as an underlying for tradable products. In order to meet the growing demand for Shariah-compliant solutions, it is envisaged that the Index will be utilised by a range of institutions including asset managers, banks, pensions and sovereign wealth funds and ETF issuers.
Ahmed Al Qassim, chief executive officer of Emirates NBD Capital, said demand for sovereign and corporate sukuk has increased significantly over the last few years attracting significant international capital. “With the launch of the Emirates NBD Markit iBoxx USD Sukuk Index, we aim to provide investors with world-class analysis tools and standardised performance measurement to enable them to make the best investment choices.”
The index will also enable the creation of products that will pave the way for greater access to the sukuk market for retail investors who have historically been underserved by opportunities to invest in this asset class.
Tariq bin Hendi, executive vicepresident and head of products and advisory at Emirates NBD, said with a strong level of 2017 sukuk issuance from both sovereigns and corporates led by Saudi Arabia and a promising pipeline for the rest of the year, the sukuk index would be a valuable tool for fund managers both within the GCC and further afield.
“From an asset management perspective, we look forward to the product development opportunities the index can provide, creating new avenues for regional and global investors to access the investment opportunities provided by Sukuk. We have worked closely with Emirates NBD Capital and the group’s research department to develop the Index, and look forward to our continued partnership on this project,” said Bin Hendi.
Tim Fox, chief economist and head of research at Emirates NBD, said, the Index would provide an additional avenue for accurate assessment of the overall development and performance of Islamic debt capital markets in the region.
While there is a plethora of indices available for conventional bonds, reliable and easily available sukuk indices are few and far between, said Fox.
— issacjohn@khaleejtimes.com