Sukuk

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/