Traders Shun Maldives as World’s First Sukuk Default Looms
- Sukuk bond price drops to record lows as FX reserves tumble
- Investors worry about payment of October coupon on dollar debt
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A selloff in Islamic bonds from the Maldives has intensified in recent weeks as investors rush to dump the island nation’s debt on fears of default.
The dollar-denominated sukuk bonds due 2026 dropped below 70 cents on the dollar this week, a record low. With double-digit losses this month, the debt is the worst performer on the Bloomberg EM Sovereign Total Return Index. The notes traded at 69.5 cents on Wednesday, down from about 93 cents in June.