Transcript
SUKUK : ANALYZING THE PERFORMANCE ON THE GLOBAL MARKET
CONTENTS
Introduction - Abstract Problem Statement Objective Methodology Data and Findings Conclusion and Summary
INTRODUCTION
Abstract The emerging market of Islamic-based
instrument due to the flaws of conventional financial instrument which heavily rely on interest (riba’)
Profit sharing method or asset backed security Recent collapsed of conventional-based banking
such as house mortgage and debt selling
PROBLEM STATEMENT
“ The performance of Islamic-based money market instrument on the global financial market”
How does the islamic-based instrument fair in the global market?
Is the recent burst of islamic-based instrument introduced in the market is only a hype?
How can we compare their performance against other established money market instrument?
OBJECTIVE
2 main objective To look at the performance of Sukuk index
against other bond index available in the market To analyze the performance of each components
in the index
METHODOLOGIES
Data gathering from published source – Bloomberg. This is considered secondary data since its published publicly and the analysis is done by compiling the data.
Measuring the performances of by the bond rating
Measuring the performance of each components against one another
Grouping the components per country of investment
Sukuk used : The Dow Jones Citigroup Sukuk Idx
DATA AND FINDINGS
Graphical Data
DATA AND FINDINGS - CONT
DATA AND FINDINGS - CONT
DATA AND FINDINGS - CONT
Tabular
Name Number of Bonds Market Value ($
Millions) Average Coupon Average Life (yrs) Quality Yield-to- Maturity
Effective Duration to LIBOR
Spread to LIBOR
Sukuk Index 15 10,496.65 3.62 3.72 A+ 3.46 3.09 185
AAA 2 1,392.69 2.65 4.12 AAA 1.94 3.92 16
AA 2 1,562.76 4.59 3.84 AA 3.62 3.52 198
A 8 6,346.40 4.18 3.85 A- 3.43 3.35 179
BBB 3 1,194.80 0.75 2.52 BBB 5.15 0.18 398
1-3 Yr. 4 1,580.21 0.82 1.54 BBB+ 4.79 0.18 406
3-5 Yr. 10 8,625.00 4.28 4.06 A+ 3.21 3.72 148
5-7 Yr. 1 291.44 0.78 6.32 BBB+ 3.56 0.23 86
DATA AND FINDINGS - CONT
Tabular II
Name Index Value 1-Month 3-Month 6-Month YTD 12-Month
Sukuk Index 125.66 -0.41 0.83 4.47 9.4 9.4
AAA 127.72 0.13 1.56 6.68 9.74 9.74
AA 120.38 -0.02 1.6 4.79 12.58 12.58
A 120.46 -0.82 0.23 4.03 9.24 9.24
BBB 87.51 0.72 2.21 4.77 7.02 7.02
1-3 Yr. 136.25 1.02 2.11 4.98 7.67 7.67
3-5 Yr. 112.6 -0.82 0.43 4.46 10.77 10.77
5-7 Yr. 101.08 -0.55 0.33 1.67 1.08 1.08
DATA AND FINDINGS - CONT
Tabular IIIName Coupon Maturity PAR ($MM) Quality Country Stated Coupon
Dubai Islamic Bank Sukuk
0.62 3/22/2012 657.5 BBB- UAE Floating-rate
Emirates Islamic Bank 0.602 6/12/2012 350 A- UAE Floating-rate
QREIC Sukuk LLC 1.016 8/2/2012 300 BBB+ Qatar Floating-rate
CBB International Sukuk Company
1.224 3/18/2013 350 A Bahrain Floating-rate
CBB International Sukuk Company
6.247 6/17/2014 750 A Bahrain Fixed-rate
Rak Capital 8 7/22/2014 400 A UAE Fixed-rate
Petronas Globak Sukuk Ltd
4.25 8/12/2014 1500 A- Malaysia Fixed-rate
IDB Trust Services Ltd 3.172 9/16/2014 850 AAA Supranational Fixed-rate
TDIC Sukuk Ltd 4.949 10/21/2014 1000 AA UAE Fixed-rate
GE Capital Sukuk Ltd 3.875 11/26/2014 500 AA+ United States Fixed-rate
Malaysia Sukuk Global 3.928 6/4/2015 1250 A- Malaysia Fixed-rate
QIB Sukuk Funding Ltd 3.856 10/7/2015 750 A Qatar Fixed-rate
IDB Trust Services Ltd 1.775 10/27/2015 500 AAA Supranational Fixed-rate
ADIB Sukuk Co Ltd 3.745 11/4/2015 750 A UAE Fixed-rate
MBB Sukuk Malayan 0.783 4/25/2017 300 BBB+ Malaysia Floating-rate
DATA AND FINDINGS - CONT
Derived Graph
YTM
Spread to LiBOR
DATA AND FINDINGS - CONT
Par Value
SUMMARY Based on the comparison on the Bloomberg
chart, the Sukuk Index is showing a significant growth for the past 5 years.
Conventional corporate bond is slightly weak compared to Sukuk Index.
Comparing those index, assumption can be made that the Sukuk is performing well better then the other corporate bond.
In the derive graph, the statistic shows that they are about 15 sukuk are being traded in the market
However, some of it is quite risky by having a wider spread to LiBOR.
CONCLUSION
The performance of Sukuk index is clearly better than the other corporate bond showing that the recent burst of Islamic money market instrument is not a hype but a proven product.
The performance of each component is also showing some good numbers although some of it might have a bigger spread to LiBOR as a sign to the banking system health where the Sukuk is traded.
INTERESTING LINKS
http://www.djindexes.com/ http://www.bloomberg.com http://dowjones.investiq.com/dowjones/isec_g
lobal.html http://www.sukuk.me/
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