Islamic bonds, or sukuk, have long been popular with investors in the Middle East. Now they are being discovered in Europe and the United States. When the Dubai government issued a $500 million, 10-year sovereign Islamic bond, last month, 38 percent of it was snapped up by Western investors, according to research by Standard & Poor’s.
“European problems helped fuel demand for alternative products like sukuk in emerging markets, which is why we’re seeing a strong wave of interest coming in from Western investors lately,” said Mohammed Dawood, managing director of debt capital markets for HSBC’s Islamic banking division.
As economies in European and other advanced countries struggle, a growing pool of investors is considering alternative investments in emerging markets. Sukuk are possible vehicles for investing in Gulf Arab countries and some Asian countries.
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