Sukuk issuances beat 2019 record, fueled by COVID-19 crisis

SectorFinancial Markets

Total sukuk issuances worldwide set a new record during 2020, reaching a total of $172.1 billion, compared to $169.1 billion issued in 2019, according to global data provider Refinitiv.Sukuk issuances saw strong momentum during the first nine months of 2020 as COVID-19 lockdown measures and a crash in oil prices prompted a ramp-up in sovereign issuance in key sukuk markets. This was to finance sweeping stimulus packages aimed at alleviating the economic impact of the pandemic.However, issuance slowed significantly during Q4 as GCC governments, and particularly Saudi Arabia, reduced their borrowing, the Islamic Finance Research Division at Refinitiv said. Excess borrowing in previous quarters and fiscal measures taken to narrow deficits reduced the need of GCC sovereigns to tap capital markets during the last quarter of 2020, it said. The economic ramifications of COVID-19 resulted in wider fiscal deficit and, in turn, higher combined financing requirements of $180 billion in 2020. GCC governments had collectively issued $105.7 billion in debt, of which $41.2 came from sovereign sukuk – a new record for GCC sovereign sukuk issuance.Sukuk issuance from Saudi Arabia totaled $22.7 billion in 2020, increasing 25 percent from 2019.

By the end of Q3 2020, the Saudi government showed promise more...