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Global sukuk issuance hit record in Q1

April 2016

April 20, 2016 |12:55 | Dubai

The proportion of sukuk bond issuance hit a record in the first quarter of 2016 in the main markets for this form of finance, according to Fitch Ratings’ analysis. The data reinforces a trend of gradually increasing use of sharia-compliant borrowing as more countries create legal frameworks to support issuance and as issuers attempt to attract a broader investor base, including Islamic finance investors.

Total new sukuk issuance (with a maturity of more than 18 months) in the Gulf Cooperation Council, Malaysia, Indonesia, Turkey, Singapore and Pakistan was around $11.1bn in 1Q16. Issuance was up 22% from 4Q15 and 21% from a year earlier, while non-sukuk bond issuance of $17.1bn was down 23% qoq and 45% yoy. Sukuk represented 39.3% of total bond and sukuk issuance in these countries during the quarter – the highest proportion in the past eight years.

The proportion of sukuk issuance in five of the last six quarters has now been above the average since the start of 2009.
“We expect sukuk issuance, both overall and as a proportion of total issuance, to remain relatively strong in the second quarter based on the pipeline of deals and the potential for some governments to issue debt to make up for weak oil revenues. The third quarter is likely to be quieter, due the combination of the summer break and Ramadan. Overall our expectation is for 2016 sukuk issuance to at least match 2015 issuance,” Fitch said.

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