Islamic finance to continue rising in 2021: Moody’s

SectorFinancial Services

Islamic banking, bonds and insurance are set to benefit from supportive government policies in many countries, as well as strong demand, despite the challenges posed by the coronavirus pandemic, Moody’s said in a new report."We expect Islamic finance to continue rising in 2021 and beyond, maintaining its now long-established growth trend. The industry generally remains underrepresented in countries with large Muslim populations, providing ample room to expand," said Ashraf Madani, Moody's vice president and senior analyst.Sukuk issuance is expected to stabilise after a record in 2020 and five consecutive years of growth. Issuance grew by 15 percent in 2020 to $205 billion, driven by large sovereign funding needs during the pandemic and drop in oil prices.“We expect issuance to consolidate around $190 billion to $200 billion in 2021, supported by GCC sovereigns' high financing needs, as oil prices remain moderate and fiscal deficits remain wide, and as the sovereigns raise the share of sukuk in overall debt,” the report said.Corporate issuance will remain limited because there are more attractive conventional market opportunities, while new issuers will support the ongoing growth in sukuk issuance in the financial institutions sector.Growth prospects in Islamic fund assets and insurance (takaful) remain strong, the report more...