Another big year for Malaysia Sukuk

The US Federal Reserve will likely continue trimming its asset purchases by $10bn a month – from $85bn a month – until it stops altogether later this year.This will mean that historically low interest rates and fixed income yields could rise as the globe’s economies start to recover and inflation kicks in. Borrowers want to lock in those low rates now and this means a rush to issue. Data from Bloomberg show that planned Sukuk sales in Malaysia for January are already double those for the whole of January 2013. Corporates have announced $1.7bn in Sukuk compared to the $700m total sold in January last year. Depending on what happens to interest rates, global Sukuk issuance volumes seem likely to wane as rates rise and the cost of borrowing increases. The other major fear is that the China debt bubble will burst and send shockwaves through the world’s economies with the epicentre on South East Asia.