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 was the top sukuk issuer with US$13.9bil or 35.1% of the US$39.5bil issued in the first quarter ended March 31, 2019, RAM Ratings said.
Indonesia was in second place with a share of 17% (US$6.7bil) and Saudi Arabia 15.3% (US$6.1bil), it said in a statement on Monday.
For March, a total of US$12.8 bil of sukuk was issued globally.
RAM’s head of Islamic finance Ruslena Ramli said a 38% on-year jump in global sukuk issuance bodes well for the pace of this segment’s performance in 2019.
“Key markets to watch are Indonesia, as the nation gears up for sovereign sukuk issuances in line with its sustainability agenda, and Saudi Arabia, whose persistent budget deficits may lead to a higher percentage of sukuk in its government funding mix,” she said.
Malaysia will remain at the forefront as an issuer, providing stability to the overall base of global sukuk issues.
Malaysia recorded a 54.4% jump in sukuk issuance as at end-March 2019, compared to only US$9bil a year earlier.
“The driver for this improvement came from the BNM Interbank Islamic Bills (BNIB-i) issuances which was introduced in March 2018 by the Financial Market Committee to support liquidity development for onshore financial markets.
“RAM envisage the BNIB-i issuances to grow further in 2019, due to its recognition as a high quality liquid asset (HQLA),” she said.
On the domestic front, outstanding sukuk increased 10.5% to RM880.3 bil as at end-March 2019 (end-March 2018: RM796.6bil).
Sukuk maintained its position as a leader in the overall Malaysian bond market, accounting for 60.9%.
Notably, its share has been trending upwards since hitting 50% in 2013.
A total of RM22.3 bil of domestic sukuk was issued in March, bringing the year-to-date issuance value to RM64.1 bil at month-end.
Similar to historical trends, the financial services and infrastructure & utilities sectors were the chief drivers of the domestic sukuk market, with respective issuance values of RM11.4bil and RM3.6bil in the first quarter.
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