Global sukuk issuance to equal $130bln in 2019

Mubasher: The value of global sukuk issuance is expected to increase by 6% to reach $130 billion in 2019, which represents a fourth consecutive annual increase, according to a report released on Tuesday by Moody's Investors Service.

That forecast can be ascribed to the increase in sukuk activity in Saudi Arabia and Malaysia, which manifested by the issuance of $87 billion sukuk in the first six months of 2019, senior vice president at Moody’s, Nitish Bhojnagarwala, said.

"We, therefore, expect second-half volumes to moderate to around $43 billion, though Malaysia and Gulf Cooperation Council countries, particularly Saudi Arabia, will continue issuing regularly,” Bhojnagarwala added.

Key Islamic finance markets – including Malaysia, Indonesia, and GCC countries – are working on adjusting their funding mix to support a long-term growth in sukuk volumes, which reflects these markets’ desire to bolster Shariah-compliant banking, Moody’s report revealed.

“New entrants and green sukuk could also stimulate issuance. Moody's expects some African sovereigns to enter the market, and Egypt set up a shariah supervisory committee in April to oversee sukuk issuance,” the report noted.

As awareness towards the risk of climate change increases, giving rise to various efforts to face the problem, the green sukuk market, although in its infancy, is expected to grow further, Moody’s forecast.