Issued report by Kuwait Finance House Research Limited (KFHR)
Sovereign authorities' issuance reached USD 59 billion in 2011, USD 19 billion by companies.
The monthly report prepared by KFHR regarding the developments in the Sukuk market during December mentioned that the total Sukuk issuance during the aforementioned period reached USD 5 billion. This resulted in unprecedented levels of issuance, which allowed global issued Sukuk to reach a value of USD 85 billion in 2011.
The report showed that sovereign issuance was the main catalyst for Sukuk market last year, where it reached USD 59 billion, while companies' issuance reached USD 19 billion. The following is the report in detail:
December wrapped up a record breaking year with a further USD5.0bln issued in the month to bring the 2011 total to USD85.1bln, a y-o-y increase of 90.2% from 2010. The global sukuk secondary market also reached an all-time high of USD178.2bln by the year-end, a 24% increase from the USD143.3bln outstanding at end-2010. On a monthly basis, issuances dropped below the yearly average in what was a quiet month for issuances outside of Malaysia. However, the primary market still recorded a y-o-y increase of 0.7% for the month of December, continuing the positive momentum into the New Year.
Among the notable issuances for the month were the Horizon sukuk, issued by an SPV on behalf of Gulf International Bank. The sukuk was issued out of the Cayman Islands, raising USD300mln from international investors. The largest issuance for the month was the third issuance of the year for Pakistan Domestic Sukuk Company Limited which issues on behalf of the government. The USD781.1mln sukuk Ijarah was structured with a three-year tenure.
The vast majority of primary market issuances were domiciled in Malaysia with only one sukuk each arising from Pakistan and Bahrain while Gambia saw its largest issuance yet of USD18.9mln for the month. The market was driven by sovereign issuances amounting to USD4bln while corporate issuances were at a three month low.
Sukuk: Overview of December 2011
Sukuk Issuance Trend | Sukuk by Domicile |
Sukuk by Structure | Sukuk by Sector |
Source: Bloomberg, Zawya, IFIS, KFHR
Sovereign issuers made up 79% of the primary market in December while corporates only took 21%. Sovereign sukuk have grown by 95.6% y-o-y in 2011 to USD58.9bln. Similarly, the total amount of corporate sukuk for the year came in at USD19.0bln, up 167.6% from 2010.
The month of December observed USD3.9bln worth of sukuk, or 78.1% of the total, denominated in Malaysian ringgit while Pakistani rupees took 15.5%, US dollars 6% and Gambian dalasi 0.4%. Total US dollar issuances for the year amounted to USD8.4bln compared to USD4.3bln in 2010.
Top 10 Sukuk Issuance by Amount (December 2011)
Issuer | Domicile | Structure | Currency | Issue Size (USD mln) | Tenure |
| Pakistan Domestic Sukuk Company Limited | Pakistan | Ijarah | PKR | 781.10 | 3 years |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 479.36 | 3 months |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 478.45 | 4 months |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 473.50 | 4 months |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 473.24 | 4 months |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 473.00 | 3 months |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 314.08 | 5 months |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 313.96 | 5 months |
| Bank Negara Malaysia | Malaysia | Murabahah | MYR | 313.40 | 5 months |
| Horizon Sukuk Limited | Bahrain | Murabahah | USD | 300.00 | 3 years |
Source: IFIS, Zawya, Bloomberg, KFHR
A total of 54 sukuk were issued in December vs. 78 sukuk in November and 53 in October. Among these, 41 were issued by the corporate sector totalling USD750mln (November: USD3.9bln, -80.8%), 13 sovereign issuances totalling USD4.3bln (November: USD5.8bln, -25.9%), and zero government-related (November: USD136.7mln, -100%).
There were only one international sukuk during the month, issued by the Horizon Sukuk Limited, an SPV issuing on behalf of Gulf International Bank.
Top Five Corporate Sukuk Issuance by Amount (December 2011)
Issuer | Domicile | Structure | Currency | Issue Size (USD mln) | Tenure |
| Horizon Sukuk Limited | Bahrain | Murabahah | USD | 300.00 | 3 years |
| Telekom Malaysia | Malaysia | Ijarah | MYR | 63.43 | 10 years |
| Esso Malaysia Berhad | Malaysia | Musharakah | MYR | 47.35 | 1 month |
| Sime Darby Bhd | Malaysia | Murabahah | MYR | 47.11 | 6 months |
| Sabah Credit Corporation (SCC) | Malaysia | Musharakah | MYR | 31.57 | 7 years |
Source: IFIS, Zawya, Bloomberg, KFHR
Sukuk: Top Underwriters December 2011
Rankings | Market Share |
Amount | Number of Issuances |
Source: Bloomberg, KFHR
Announced Sukuk in December 2011
| Issuer | Domicile | Structure | Currency | Issue Size (USD mln) |
Government of Saudi Arabia | Saudi Arabia | n.a | n.a | n.a |
Government of South Africa | South Africa | n.a | n.a | n.a |
General Authority of Civil Aviation | Saudi Arabia | n.a | USD | 7,200 |
Sarawak Energy | Malaysia | n.a | MYR | 500 |
Source: IFIS, Zawya, Bloomberg, KFHR
Selected Sukuk Yields - December 2011
1Malaysia Global Sukuk Commentary: The yield of Malaysia's global sukuk due in 2015 dropped during December by 16 basis points to 2.656% from 2.816% at the start of the month. The yield has gained 40 basis points during 2011. Meanwhile, the yield of Malaysia's Shariah-compliant debt maturing in 2016 fell to 3.37%, a 12-month low as prospects of an interest rate cut increase with the worsening European debt crisis. | Dubai DOF Sukuk Commentary: Yields on Dubai's USD1.25bln sukuk due in 2014 declined by 27 basis points to 5.461% from the end-November. The yield has declined by 89 basis points this year, lowering the spread of Malaysian Shariah-compliant debt by 68 points during the period. The year-end rally sends a positive signal for 2012, suggesting more investors are becoming convinced the emirate can arrange smooth refinancing for state-owned firms next year. |
TDIC Sukuk Commentary: The state-owned Tourism Development and Investment Company sukuk yield fell in December by 27 basis points to 2.707% after a 5-month high in November. During the month the company launched its second phase of residential properties at Saadiyat Beach with expected delivering the 4Q12. | QIB Sukuk Funding Ltd Commentary: The Qatar Islamic Bank (QIB) sukuk yield declined by 31 basis points in December, finishing the month at 2.951%. During the month Qatar Islamic Bank announced that it will acquire the Shariah-compliant corporate portfolio of International Bank of Qatar (IBQ). The agreement will see IBQ's Islamic corporate financing facilities and its deposit accounts transferred. |
Source: Bloomberg, KFHR
© Press Release 2012
