Malaysia leads in sukuk issuance at RM78.24bil

RAM Ratings said in line with the downward bias in global interest rates and the subsequent search for yields, domestic bond yields also retreated across the entire maturity spectrum and rating bands in June.

KUALA LUMPUR: Malaysia still leads in terms of the number of sukuk issuance and financing amount at US$19.4bil (RM78.24bil) as at end-June 2018, which is 38.7% of the global market share.

RAM Ratings said on Tuesday Malaysia increased its sukuk issuance increased from end-June 2017 at US$18.6bil out of the global sukuk issuance of US$50.3bil. Globally, it had slipped 5.2% on-year from end-June 2017 of US$53bil. 

RThe rating agency maintains its projected global sukuk issuance at US$75bil to US$85bil, based on the growth trends in sukuk issues from Malaysia, Indonesia, Bahrain, Kuwait and UAE in the first six months of 2018. 

“Overall, the sukuk market’s showing in 2018 will depend on the performance of the global economy and the state of investment recovery in key Islamic finance countries,” said Ruslena Ramli, head of Islamic finance at RAM.

She attributed the lower sukuk issuance in the first half of 2018 largely due to declines in sukuk issuance from Qatar (-63.6%), Saudi Arabia (-37.9%), and Turkey (-18.0%). 

RAM said Indonesia charted a 52.6% jump to US$6.6bil (end-June 2017: US$4.3bil). 

“By contrast, the Gulf Cooperation Council (GCC) posted a contraction of 19.1% to US$21.3bil (end-June 2017: US$26.3 bil). 

“Nevertheless, the GCC’s sovereign sukuk issues took up the lion’s share (67.6%) of its total sukuk issuance, reversing earlier market trends. Prior to 2017, the percentage of sovereign sukuk issuance only averaged some 25%,” it said.