A new report by S&P Global Ratings has found that global Sukuk Issuance is set to increase in 2021. Sovereigns in the core Islamic finance countries, Gulf Cooperation Council (GCC), Malaysia, Indonesia and Turkey are expected to tap the Sukuk market more aggressively during the year. The report has also predicted an increase in issuance by corporates, who’s activity was muted in 2020 as they held on to cash and deferred capital expenditure because of the pandemic.
$65 billion of Sukuk will mature in 2021, and part of this total is likely to be refinanced on the Sukuk market. The report further expects that total Sukuk issuance will reach around $140 billion to $155 billion in 2021, compared to $139.8 billion in 2020, thanks to a recovery in issuance in Malaysia, Indonesia and the GCC Countries.
Downside risks for the core Islamic finance countries remain significant, the most pressing being whether the Covid-19 pandemic can be brought under control. The main risk is that further waves of Covid-19 and the government measures to counteract it may harm the countries’ fragile economic recovery.
Key Takeaways from the report include:
- The global Sukuk market should continue to enjoy record-low interest rates and abundant liquidity throughout 2021 and beyond.
- Gobal Sukuk issuance is expected to increase to about $140 billion
- $155 billion in 2021 as issuers in core Islamic finance countries return to the market.
- We could finally see progress on the development of a global legal and regulatory framework for Islamic finance in 2021-2022.
- Sukuk targeting social needs and the green agenda are likely to remain embryonic, despite opportunities arising from the pandemic and the energy transition.
To find out more or read the report in full, click here.