Global sukuk issuances up 18% to reach $145.70bn in 2019

Global sukuk issuances rose 18 per cent to reach $145.70 billion (Dh535bn) in 2019 as the governments and private companies used Islamic finance instruments to fund their projects, according to the latest report from Bahrain-based International Islamic Financial Market (IIFM).

“This is the highest value of yearly sukuk issuance ever since its  launch in 2001,” the report said.

“The steady issuance volume during 2019 was mainly due to sovereign sukuk issuances from Asia, GCC, Africa and certain other jurisdictions while Malaysia continues to dominate the sukuk market though share of countries like Indonesia, the UAE, Saudi Arabia and Turkey increased with good volume.”

Abu Dhabi’s Aldar Properties, Saudi Arabia’s Almarai Company, Dubai’s DP World, Emaar Properties and Dubai Islamic Bank issued sukuk to raise funds last year. Aldar issued a $500 million sukuk to refinance its debt while DP World issued a $1bn sukuk.

The Central Bank of Bahrain as well as the governments of Sharjah, Oman and Saudi Arabia also issued sukuk last year.

“The sukuk issuances by sovereign, quasi-sovereign and to some extent by corporates and financial institutions mainly from GCC, Indonesia and Malaysia have contributed to an increase [in] volumes,” the report said.

Total international sukuk issuances stood at $38.47bn in 2019, up 16.6 per cent compared to the previous year and highest since the inception of sukuk market in 2001. Domestic sukuk issuances also rose 18.9 per cent to $107.26bn, with the biggest chunk of this increase coming from Malaysia which issued sukuk worth $54bn, followed by Saudi Arabia at $18.90bn and Indonesia at $17.30bn.

The value of long-term sukuk in 2019 stood at $76.45bn while short-term sukuk issuances reached $30.77bn, the report shows.

“The US dollar continues to be the favoured currency for attracting international investors around the globe. Local currency sukuk will develop in the coming years as more OIC countries develop their domestic sukuk markets. This trend is taking shape with Indonesia, Turkey, Pakistan, Africa and the GCC countries issuing local currency sukuk.”

The report also said the global financial markets are facing a great deal of uncertainty due to the Covid-19 pandemic which may momentarily impact the sukuk issuances.

"However, given the unique features of sukuk, the environmental, social and educational financing requirements present a huge potential to be realised in the medium-term,” Ijlal Ahmed Alvi, chief executive of IIFM, said.