IslamicFinance.de

Across the globe governments and corporates are attempting to take advantage of low interest rates caused by the US Federal Reserve’s extraordinary bond buying programme, locking in long term borrowing at peppercorn rates. The central bank of Qatar hopes to issue a mixture of conventional and Islamic government debt with a face value of $6.6bn. The debt programme will be at the shorter end of the yield curve and will be sold in three and five year tenors. Just under half the issuance will be Sukuk, with the rest in conventional instruments. Managing duration is very important for bond fund managers as it allows them to determine the risk on their total bond portfolio for a given move in interest rates. A longer duration bond will move more in value than a bond with a shorter duration for each 0.01 per cent (or 1 basis point) move in interest rates.