Dubai eyes $1.5bn Malay sukuk

Dubai plans to issue about $1.5 billion sovereign sukuk in Malaysia as the Gulf Arab emirate looks to tap the world's largest Islamic bond market to diversify its funding avenues, sources said on Wednesday.

Work on the $1.5 billion multi-currency programme was "more than 50 per cent" under way but the plan was not final given the volatility in financial markets due to Ireland's debt troubles and tensions on the Korean peninsula, one source said.

"This will be the first foreign sovereign to issue ringgit (sukuk) in Malaysia," said the source who asked not to be identified as the plan has not been announced.

"The Malaysian market provides cheap liquidity, interest rates are still attractive and the swap rates are also still attractive."