Malaysian sukuk investors are designing strategies for 2015 that will profit as a new tax both pushes up inflation and forces central bank rate increases.
Malaysian consumer-price increases will average 4 percent in 2015, the highest in seven years, as a new consumption tax starts in April.
One-year interest-rate swaps have climbed 15 basis points since July, when the central bank increased its benchmark rate for the first time in more than three years.
The yield on Malaysia’s two-year government sukuk, which are more sensitive to changes in borrowing costs, rose 38 basis points this year to 3.63 percent and is set for the biggest annual increase since 2010, according to a central bank index. A yield curve tracks rates of different maturities and longer-term debt are more susceptible to inflation expectations.
Concern about a drop in revenue resulting from the collapse in crude for oil-exporting Malaysia and an 8 percent decline in palm oil from a Nov. 3 high has pushed the ringgit to a five-year low and threatens to boost import costs.