Global data provider Refinitiv has revealed that total Sukuk issuances across the globe touched a new record value of $172.1 billion in 2020, compared to $169.1 billion issued in the previous year.
The data provider observes that the Sukuk issuance saw strong growth in the first three quarters of 2020 as countries across the globe used sovereign issuance in key Sukuk markets to support their COVID-19 stimulus packages to support their respective economies amid COVID-19 lockdown measures and crash of oil prices.
The Islamic Finance Research Division at Refinitiv states that as GCC states, and particularly Saudi Arabia, reduced their borrowing during the last quarter of 2020 there was a significant slowdown in Sukuk issuance as well.
The team observes that GCC governments had collectively issued $105.7 billion in debt, of which $41.2 came from sovereign Sukuk, a new record for GCC sovereign Sukuk issuance.
The Kingdom of Saudi Arabia raised a total of $22.7 billion in 2020, a 25 percent increase when compared to the previous year. While the Saudi government was expected to overtake the Malaysian government as the top Sukuk issuer for the year, the Kingdom wrapped up its domestic borrowing by the end of Q3 2020, securing an excess of $690 million to cover financing needs till the end of the year.
A better outlook for 2021
The Islamic Finance Research Division at Refinitiv expects Sukuk issuances to pick up further momentum during 2021 as some active and first-time issuers are expected to tap into the Sukuk market with further assistance by the recent reconciliation and end of the blockade on Qatar which opens up a huge Sukuk market across the globe. Issuance from Qatar nearly halved to $2.4 billion in 2020 from $5.1 billion in 2019.
Sukuk issuances are expected to improve elsewhere as well as the governments of Egypt and Indonesia taking several progressive steps to increase Sukuk issuance.
Egypt is expected to issue two sovereign Sukuks in early 2021 after receiving the necessary clearance and formulation of the Sovereign Sukuk Act in November 2020.
The Indonesian government has also announced plans to increase its Sukuk issuance to over $25 billion in 2021, accounting for 30 percent of its total sovereign debt issuance.