Investment trend: Formosa sukuk could help GCC issuers diversify funding – ZAWYA

Investment trend: Formosa sukuk could help GCC issuers diversify funding – ZAWYA

The ability of GCC issuers to tap the Formosa market for sukuk could boost the overall global sukuk market, although it will take time for investor appetite to develop, and issuance is restricted to investment-grade issuers, the ratings agency said.. The Formosa bond market is nearly entirely US dollar-denominated, making it a good fit for GCC issuers given that GCC currencies are pegged to the dollar.. It is also large relative to GCC local sukuk markets, which could benefit sukuk pricing and liquidity if Formosa sukuk grows in popularity.. The Formosa bond market had about $175 billion of outstanding debt at 25 February 2020, compared with total GCC local currency sukuk of about $100 billion, and a total global sukuk market of about $500 billion.. "GCC issuers, including Government of Qatar, Qatar National Bank , First Abu Dhabi Bank and Arab Petroleum Investments Corporation , have increasingly tapped the Formosa bond market in recent years.. GCC issuers, led by those in Qatar and the UAE, account for about 20 percent of total outstanding Formosa bonds.. We may witness a rise in sukuk issuances from GCC oil-exporting countries..