Dubai’s Emirates NBD launches sukuk index

Dubai-based lender, Emirates NBD, on Wednesday launched a sukuk index, covering global US dollar-denominated Islamic bonds.

The Emirates NBD Markit iBoxx USD Sukuk Index will contain 98 sukuks from 61 issuers with a current market value of more than $90 billion, Ahmed Al Qassim, CEO of Emirates NBD Capital, said at a press conference.

Developed in collaboration with IHS Markit, the index will be a market-cap weighted index dedicated to capturing the performance of the sukuk market.

It will be used for benchmarking, risk and performance analysis and as an underlying for tradable products.

“With a strong level of 2017 sukuk issuance from both sovereigns and corporates, led by Saudi Arabia, and a promising pipeline for the rest of the year, index will be a valuable tool for fund managers both within the GCC and further,” Tariq Bin Hendi, executive vice-president and head of products and advisory said.

Saudi Arabia will become a very large part of this index very quickly, Usman Ahmed, managing director-investments at Emirates NBD Asset Management, told Argaam on the sidelines of the conference.

Issues from Saudi Arabia will constitute “9 to 10 percent of this index,” Ahmed said.

A list of sukuks to be covered by the index, along with Emirates NBD’s credit insights, will be out with the July update on the index, Anita Yadav, head of fixed income research, told Argaam.

“The IP of the index stays with IHS Markit. A third-party will have to collaborate with Markit for that information,” Yadav said, adding that the information will be available for Emirates NBD clients.

New issues will be added to index as part of its monthly balancing, Yadav said. “First of every month the index's constituents will be refreshed. Anything issued during the month, new security coming in will join the index,” she said.

Bonds that will be eligible for inclusion include: fixed coupon sukuk, callable and putable sukuk, step-up and event-driven sukuk, amortizing sukuk with fixed sinking schedules, and floating rate sukuk.

The index will exclude: 100 percent murabaha sukuk, zero-coupon and zero-coupon step-up sukuk, inflation and other index-linked sukuk, optionally and mandatory convertible bonds, sukuk that have already been called prior to rebalancing, and defaulted sukuk.