Manama, Kingdom of Bahrain - The International Islamic Financial Market (IIFM) announced the launch of the 12th Edition of its annual Sukuk Report. The research report provides wide-ranging information on global Sukuk issuances, types of issuers, Sukuk structures, case studies on select landmark issuances, articles on Sukuk market developments and country-focused reports on IIFM founding member countries as well as certain Sukuk issuing jurisdictions.
The report finds that the year 2022 remained resilient for Sukuk with global issuances amounting to US$ 183 billion which is a marginal drop of 3% in issuances as compared to USD 188 billion in 2021. Around 19.5% of these Sukuk are international issuances while the rest are domestic issuances. Although new jurisdictions continue to enter the market, Sukuk issuances still remain fairly concentrated with around 93.60% of the USD 794 billion outstanding Sukuk belonging to just a handful of key markets - Malaysia, Indonesia, GCC and Turkiye. Malaysia continues to maintain its top position in terms of issuances followed by Saudi Arabia, Indonesia, supra-nationals (mainly Islamic Development Bank), United Arab Emirates and Turkiye.
A virtual launch event was held to mark the publication of the report. The well attended webinar began with an opening address from Mr. Nik Mohamed Din, Director-General of Labuan Financial Services Authority (Malaysia) and Vice Chairman of IIFM who provided an update on digital Sukuk and the potential use of blockchain technology. He said, “Digitalizing Sukuk via Sukuk tokenization opens up a new spectrum of issuers and investors. By leveraging on digital technology and blockchain, tokenization will be the new business model for fund-raising investments. Tokenization will also provide diversification for the issuers as it allows smaller and medium enterprises (SME’s) to raise funds and unfold investment opportunities to a wider range of investors, including retail investors”.
Dr. Sami Al-Suwailem, Acting Director General of Islamic Development Bank Institute, delivered the keynote address at the event. In his speech, he highlighted the potential role of modern technologies in the design and implementation of Sukuk structures that enhance resilience and productivity while keeping risk under control. Al-Suwailem emphasized the importance of streamlining creativity and innovation so the industry can continue its pace of progress and heighten its contribution to economic prosperity.
In the formal launch of the report, Mr. Ijlal Ahmed Alvi, Chief Executive Officer of IIFM presented the key highlights from the report. He said, “It is extremely important that the industry’s stakeholders remain committed in advancing the positive developments in the Sukuk market particularly in the area of SME focused Sukuk issuances on crowd funding platform, Waqf-linked Sukuk and use of smart contracts,” said.
He added, “Concerted efforts are required by all the stakeholders of the industry including regulators and infrastructure organizations to collectively work in increasing the current negligible share of asset-backed Sukuk issuances as this type of issuances will further assist the development of a diversified Sukuk market”.
A panel discussion followed the report launch where market practitioners discussed Global Sukuk Market Trends in 2022. Chaired by Mohamed Abderrezak, Group Shari’ah Compliance Officer at Bank ABC Islamic, the session included Sabir Ahmed, Executive Director of Islamic Origination at Standard Chartered Bank, Dr. Ayaz Ismail, Director of Islamic Wholesale Banking at CIMB Islamic Bank, Mohammad Al Nassar, Chief Dealer-Capital Markets at Kuwait Finance House, Dr. Scott Levy, CEO of Bedford Row Capital and Debashis Dey, Partner & Global Head of Islamic Finance at international law firm White & Case. In a wide-ranging session, the panelists discussed primary market issuances, Sukuk structures, secondary market activity, retail focused Sukuk issuances by SME’s on crowd funding platform, use of Sukuk in liquidity management tools and market conditions including the recovery of investor appetite in the current calendar year after the challenges of 2022.
The panel was followed by specialist presentations, with Dwi Irianti Hadiningdyah, Director of Islamic Financing at the Ministry of Finance-Indonesia and Arief Hartawan, Executive Director at Bank Indonesia showcasing the growth of Sukuk market in Indonesia especially the potential of cash Waqf-linked Sukuk. There was also a special presentation by Zakky Bantan, Head of Funding and Manager, Capital Markets Division at the Islamic Development Bank, covering landmark issuances from the bank in recent months and in particular their focus on both social and green finance.
The final session, was a panel discussing the UN Sustainable Development Goals (SDG’s) and related Sukuk issuances. Chaired by Mustafa Adil, Head of Islamic Finance at the London Stock Exchange Group, the panel included Ahmed Jan, General Manager, Treasury at the International Trade Finance Corporation (ITFC), Lilian Le Falher, Head of Treasury and Capital Markets at Kuwait Finance House-Bahrain, David Testa, Executive Director of DDCAP Group, Luma Saqqaf, CEO of Ajyal Sustainability Consulting and Dr. Hatim El-Tahir, Director at Deloitte & Touche-Middle East. The panel discussions focused on Green, Socially Responsible Investments (SRI) and Sustainability-linked Sukuk. The panel also discussed the impact of Environmental, Social & Governance (ESG) considerations on the Sukuk market and the potential of carbon credit market in achieving the SDG’s.
Nearly 350 market participants representing around 175 institutions based in over 35 countries registered for the webinar.
Mr. Alvi acknowledged the continuous support of the Central Bank of Bahrain, Securities Commission Malaysia, Bank Indonesia, Ministry of Finance-Indonesia, Brunei Darussalam Central Bank, State Bank of Pakistan, Bangladesh Bank and several other stakeholders in helping IIFM with the verification of Sukuk issuances data.
He also thanked the IIFM research team, contributors of Sukuk case studies & articles from leading financial institutions, country focus reports from member countries’ regulators and the valuable support from the sponsors namely DDCAP Group, Kuwait Finance House, Bank ABC Islamic and Labuan FSA which made the production of this report possible.
The IIFM Sukuk Report (12th Edition) is freely downloadable from: www.iifm.net
IIFM is a global standard-setting body of the Islamic Financial Services Industry (IFSI) focusing on standardization of Shari’ah-compliant financial contracts and product templates.
IIFM is hosted by the Central Bank of Bahrain (CBB) and was established under Royal Decree No (23) Year 2002 of the Kingdom of Bahrain as a neutral and non-profit international Islamic infrastructure development institution, by the collective efforts of the CBB, Islamic Development Bank, Bank Indonesia, Bank Negara Malaysia (delegated to Labuan Financial Services Authority), Central Bank of Sudan and Brunei Darussalam Central Bank.
Besides the Founding and Permanent Members, IIFM Board of Directors consist of Islamic and international banks namely Kuwait Finance House, Dubai Islamic Bank, Saudi National Bank, Standard Chartered Bank, Bank ABC Islamic, National Bank of Kuwait, GFH Financial Group and BNP Paribas.
IIFM is also supported by certain regulatory and government bodies such as State Bank of Pakistan, National Bank of Kazakhstan and DIFC Authority as well as by a number of international and regional financial institutions and other market players active in Islamic finance.
Information on IIFM and its activities is available on www.iifm.net
Mr. Usman M. Naseer, Senior Officer, Business Development, IIFM