Mild Rebound in Oil Provides Technical Support as Sharjah Re-opens

Commentary by RHB Global Sukuk Markets Research, Kuala Lumpur, Malaysia

The Bloomberg Malaysia Sukuk Ex-MYR Total Return (BMSXMTR) and Dow Jones Sukuk Total Return (DJSUKTXR) indices closed slightly higher at 101.0 (+0.19%) and 153.5 (+0.36%) respectively, with weighted average yield declined 2.5bps WoW to 2.81%. SECO ’22-24 and Qatar ’18-23 gained by USD86.6m in market cap but partially offset by RAKS ’25, SHARSK ’24, NOORBK ’20, PETMK ’20 and QIIK ’17.

Brent oil has been trading in volatile range that finally settled 6.8% higher WoW to USD30.5/bbl. However, prospects remain weak on subdued demand in China and oversupply condition persists following re-entry of Iran, Iraq’s highest production December (of 4.13m bpd) and National oil Saudi Aramco’s to maintain capex plan despite gap between supply and demand were about to narrow in 4Q15 (see Chart of the Week), according to EIA. Focus this week would be on US FOMC meeting, ECB and BOE (tonight) as well as BoJ on Friday. Malaysia will announce their Budget revision on Thursday (28 Jan)

Sharjah (A3/A/NR) printed USD500m of 5y Sukuk at MS+250, which carries a profit rate of 3.839%, while Exim Bank Malaysia (A3/NR/NR) printed a USD37.3m of 5y at 3.01% last week. In the pipeline, Oman Telecom and Gulf Investment Corp (GIC) are among issuers eyeing for sukuk deal, apart from Indonesia, Khazanah and TNB.

Sukuk Supply Jan 2016