Global Sukuk issuance hits USD91.9B in H1 of 2024
Date
7/16/2024 5:03:09 AM
(MENAFN) Standard & Poor's Ratings has reported that global sukuk issuance reached USD91.9 billion in the first half of this year, showing a slight increase from USD91.3 billion in the same period last year. Notably, foreign currency-denominated sukuk saw a significant rise of 23.8 percent, totaling USD32.7 billion compared to USD26.4 billion in the previous year's first half.
The surge in foreign currency issuances was largely driven by issuers from key Islamic finance hubs such as Saudi Arabia, the United Arab Emirates, Oman, Malaysia, and Kuwait, according to the latest report from S&P. Mohammed Damak, S&P Global Head of Islamic Finance, highlighted that the agency maintains its 2024 global sukuk issuance forecast between USD160 billion and USD170 billion, with foreign currency issuances expected to range from USD45 billion to USD50 billion.
The agency attributes the robust growth in foreign currency sukuk to enhanced clarity on medium-term interest rates, anticipating the US Federal Reserve to initiate rate cuts starting in December 2024. This development is seen as supportive for foreign currency-denominated sukuk issuance.
S&P also underscored that substantial financing needs in major Islamic finance markets have contributed to the upswing in sukuk issuances. Looking ahead, the adoption of AAOIFI's Shariah Standard No. 62 is expected to influence sukuk issuances from next year onwards. This standard mandates the actual transfer of underlying assets to investors, emphasizing asset-backed sukuk structures.
Mohammed Damak emphasized that this shift towards asset-backed sukuk will likely reshape the industry's dynamics, aligning practices more closely with Shariah principles and investor preferences.
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