IslamicFinance.de

Prime Minister Datuk Seri Najib Tun Razak’s goal of reining in the budget deficit looks set to get tougher as a unit of the nation’s biggest lender predicts borrowing costs on Islamic bonds will climb to a record. Maybank Islamic Asset Management says benchmark sukuk yields may rise to 5% this year should the United States raise interest rates to 1.25% from a maximum 0.5% now, and if investors price in further tightening in the following 12 months. Higher yields on government debt may complicate Najib’s efforts to fund a US$444bil development programme to build railways, roads and power plants. The ringgit is already down 2.2% in 2016 as a selloff in Chinese stocks sparked risk aversion.