MENA Sukuk market continues strong expansion in H1 2024
Date
6/30/2024 9:08:53 AM
(MENAFN) During the first half of 2024, the sukuk market in the Middle East and North Africa (MENA) region continued to expand, contrasting with a decline observed in the broader Islamic finance sector. According to data, the MENA sukuk market saw robust growth driven by issuances focused on environmental, social, and corporate governance (ESG) criteria, alongside sovereign issuances.
The growth in the sukuk market underscores efforts by issuers to diversify their financing sources and capitalize on increasing investor interest in Islamic finance portfolios. Despite challenges faced by the broader Islamic loan market, which experienced a 21 percent decrease to approximately USD13.35 billion compared to the same period last year, sukuk offerings remained competitive in terms of rates and terms relative to conventional loans.
Notably, ESG sukuk dedicated to funding green and social projects saw a significant rise of 48 percent year-on-year in the first half of 2024, totaling USD6.2 billion from eight issuances. Saudi Arabia emerged as a key player in this sector, with five sukuk issuances raising USD3.98 billion, while the UAE contributed USD2.25 billion through its own sukuk offerings.
The surge in ESG sukuk issuance was supported by regional financial institutions like Emirates Islamic Bank, which launched its inaugural USD750 million issuance. This trend highlights the commitment of Islamic finance in the MENA region towards integrating environmental, social, and governance criteria into investment strategies. The momentum in ESG sukuk has been further bolstered by significant climate finance initiatives announced by the UAE during the United Nations Climate Change Conference (COP28) last year, signaling a proactive approach towards sustainable financial practices in the region.
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