Global sukuk shows pockets of opportunity: S&P

Global sukuk shows pockets of opportunity: S&P

Issuance of sukuk denominated in foreign currency was up about 9% in the first half of 2023, thanks to Saudi Arabia and a few new issuers. In a report "The Global Sukuk Market Is Showing Pockets of Opportunity," S&P Global Ratings says it expects global sukuk issuance will total $160 billion-$170 billion this year. This figure is higher than S&P’s initial estimate of $150 billion, but still slightly below the figure in 2022 as local currency sukuk issuance declines. The recent rise in foreign currency-denominated sukuk issuance was mainly due to features specific to certain core Islamic finance markets. In Saudi Arabia, for example, reduced banking system liquidity and lower oil prices meant a decline in sovereign local currency sukuk but higher foreign currency-denominated issuances. Mixed activity "The mixed activity levels highlight the sukuk market's geographic concentration," said S&P Global Ratings credit analyst Dr Mohamed Damak. "To attract interest from non-core jurisdictions, the industry may need to rethink the issuance process and harmonise its Sharia standards." S&P still believes total sukuk issuance will likely be lower this year than in 2022 or 2021, even though it anticipates additional foreign currency activity in the market. That said, S&P sees continued growth