Global Sukuk issuances rose 18% to reach an all-time high

By Rahul Vaimal, Associate Editor
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DP World Sukuk announcement on Dubai Nasdaq
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According to the latest study from the Bahrain-based International Islamic Financial Market (IIFM), global Sukuk issuances have increased 18% to $145.70 billion in 2019 as governments and private companies used Islamic finance instruments to fund their ventures.

“This is the highest value of yearly Sukuk issuance ever since its launch in 2001,” the report said.

“The steady issuance volume during 2019 was mainly due to sovereign Sukuk issuances from Asia, GCC, Africa and certain other jurisdictions while Malaysia continues to dominate the Sukuk market through the share of countries like Indonesia, the UAE, Saudi Arabia and Turkey increased with good volume.”

Aldar Properties of Abu Dhabi, Almarai Company of Saudi Arabia, Dubai’s DP World, Emaar Properties and Dubai Islamic Bank released Sukuk last year to raise funds. Aldar released a $500 million Sukuk to refinance its debt while a $1 billion Sukuk was issued by DP World.

Bahrain’s Central Bank as well as the Sharjah, Oman and Saudi Arabia governments have released Sukuk last year.

“The Sukuk issuances by the sovereign, quasi-sovereign and to some extent by corporates and financial institutions mainly from GCC, Indonesia and Malaysia have contributed to an increase [in] volumes,” the report said.

Total international Sukuk issuances in 2019 stood at $38.47 billion, up 16.6 percent from the previous year and the highest since the Sukuk market was introduced in 2001.

Domestic Sukuk issuances also increased 18.9 percent to $107.26 billion, with the largest chunk of this rise coming from Malaysia, which released $54 billion in Sukuk, followed by $18.90 billion in Saudi Arabia and $17.30 billion in Indonesia.

In 2019, the value of long-term Sukuk stood at $76.45 billion while short-term Sukuk issuances exceeded $30.77 billion, the study shows.

“The US dollar continues to be the favored currency for attracting international investors around the globe. Local currency Sukuk will develop in the coming years as more OIC countries develop their domestic Sukuk markets. This trend is taking shape with Indonesia, Turkey, Pakistan, Africa and the GCC countries issuing local currency Sukuk.”

The study also found that the global financial markets are facing a lot of uncertainty due to the COVID-19 pandemic that could have a momentary effect on the issuance of Sukuk.

“However, given the unique features of Sukuk, the environmental, social and educational financing requirements present huge potential to be realized in the medium-term,” Ijlal Ahmed Alvi, chief executive of IIFM, said.