Source: Refinitiv
Doha: Global Sukuk issuance is projected to moderate, settling at $185bn in 2022, according to the 2022 Sukuk Perceptions and Forecast Study released by Refinitiv, a London Stock Exchange Group (LSEG) business.
According to Refinitiv’s 2022 Sukuk Survey, around 41% of respondents indicated they were still bullish about growth in global sukuk supply.
The report, titled “Navigating a new Environment”, projected global sukuk issuance would grow at an estimated CAGR of 6.8 percent over the next five years, reaching $257bn in 2027. The report indicated that the momentum of international sukuk issuance began to slow in the first half of 2022, despite strong activity from issuers capitalising on high demand from international investors early in the year.
Mustafa Adil, Head of Islamic Finance, Refinitiv, an LSEG business, said: “A new sukuk issuance record had been set in 2021 for the fifth consecutive year, reaching a total of $196.5bn. Although this was up by 8.2 percent from $181.6bn in 2020, that compares with much greater average annual growth of 21 percent in the previous five years.”
“Global sukuk issuance in the first half of 2022 raised $100.9bn, marginally lower than $104.2bn H1 2021. Despite a strong start to the year, issuance momentum slowed as the Federal Reserve and other central banks kicked off a global monetary tightening cycle. The surge in oil prices also contributed to the slowdown in issuance, as it reduced government borrowing needs in core sukuk markets. Dollar sukuk issuance amounted to $22bn in H1 2022, down 10 percent from $33.2bn in H1 2021, as issuers concentrated their borrowing in domestic markets and the Fed’s tightening policy strengthened the dollar,” he added.
Malaysia, Saudi Arabia and Indonesia remained the largest issuance bases for sukuk , and together made up 75 percent of sukuk issued in in 2021 and the first half of 2022.
In Saudi Arabia, sukuk raised $28.1bn during H1 2022, compared with $24.2bn during the same period of 2021, despite the surge in oil prices. Still, issuance slowed during the second quarter as the Kingdom registered a surplus from higher oil revenues. As with most GCC governments, issuances supporting new and continuing infrastructure projects will likely be offered once volatility in global financial markets calms. This is also the case with the region’s ESG sukuk issuances that are in the pipeline awaiting more conducive conditions.
Sovereigns continue to drive sukuk issuance, maintaining around a 60 percent share of global issuance since 2017. Sovereign sukuk issued in H1 2022 totalled $68.8bn, of which 83 percent were issued by GCC, Malaysian and Indonesian governments. The Saudi government was the largest sovereign issuer in H1 2022, with $22.1bn, despite soaring oil prices having reduced government funding requirements.
