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Value of global sukuk in July tops USD 12.9 bln

KUWAIT, Aug 4 (KUNA) -- In its latest monthly report on the global market of 'sukuk' (Sharia-compliant bonds), the research unit of Kuwait Finance House (KFH) said Saturday the volume of issuance of international Sukuk in July reached USD 12.9 billion, while the volume of issuance since the beginning of the year reached USD 79.3 billion.

The primary sukuk market expanded for a third consecutive month in July with the largest amount issued since January. The total amount issued for the monthly period ended at USD 12.9 bln representing a m-o-m and y-o-y increment of 20.8 percent and 156.0 percent, respectively.

Total issuances so far in 2012 amount to USD 79.3 bln., 51.2 percent higher than the same period of 2011 and just 6.8 percent shy away from last year's total issuance amount.

Governments made up the vast majority of sukuk issuances in July across jurisdictions despite the largest total monthly issuance from corporates since January.

Notable issuances during the month include the dual-tranche sukuk by the Qatari government worth a combined USD4.0 bln.

With huge pent-up demand for sukuk issuances, the issuance was oversubscribed six times and was able to achieve significantly low profit rates of 2.099 percent and 3.241 percent for both 5.5 year and 10.5 year tenures.

Meanwhile, Kazakhstan successfully placed the first Sharia-compliant paper out of the Commonwealth of Independent States (CIS) region with its ringgit-denominated sukuk Murabahah worth RM 240 mln (USD76.0 mln) as part of a larger RM1.5bln medium-term note program established in Malaysia.

The five-year sukuk was priced at 5.5 percent and rated BBB- :BBB+ by Fitch:S&P. Both Emaar and Emirate Islamic Bank also placed USD 500 mln out of the UAE during July.

Sovereign issuers made up 78.5 percent of the primary market in July while government related entities accounted for 0.6 percent and corporates took the remaining 21.0 percent. Malaysian ringgit accounted for only 56.9 percent of issuances during the month as compared to 67.8 percent average for the year. 38.7 percent were denominated in US dollars, the highest share so far this year A total of 62 sukuk were issued in July vs. 74 sukuk in June and 95 in May. Among these, 36 were issued by the corporate sector totaling USD2.7bln (June: USD 2.0 bln, +35.0 percent), 25 by sovereigns totaling USD 10.1 bln (June: USD 6.1 bln, +65.6 percent) and 1 by a government related entity worth USD 76.0 mln (June: USD2.6, -97.1 percent).

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