Global sukuk supply expected to accelerate in 2021: Fitch Ratings

SectorFinancial Markets

Global sukuk supply is expected to accelerate in 2021 following a resilient 2020 as issuers seek to address the elevated debt and to meet large budget needs caused by COVID-19, Fitch Ratings on Tuesday. The reconciliation deal signed between GCC countries, Egypt and Qatar is also expected to contribute to higher volumes of investments. In this regard, Fitch expected that Qatari sukuk volumes will gradually increase after the normalisation of relations with its GCC neighbours, and the eventual easing of investment restrictions for Islamic investors based in countries like Saudi Arabia and UAE. Fitch Ratings also said that green, sustainable, transitional and hybrid sukuk, as innovative investment instruments, are likely to continue attracting wider investor demand appetite. For Islamic finance, Fitch expected sovereign funds in key Islamic finance countries to remain major contributors to overall sukuk volumes, while issuance from first-time sovereign issuers, financial institutions and corporates are set to increase as they face challenging conditions and take advantage of the current lower cost of funding. more...