(MENAFN- Khaleej Times)
Global sukuk issuance is likely to hit $200 billion in 2025 as global outstanding sukuk is poised to surpass $1 trillion this year, according to debt market experts. Foreign currency-denominated issuance will contribute $70 billion to $80 billion of this year's total sukuk issuance.
Analysts at S&P Global Ratings said despite a marginal decline, the market saw a notable 29 per cent year-on-year increase in foreign-currency denominated sukuk, which surged to $72.7 billion in 2024.
Fitch Ratings predicted that outstanding global sukuk is set to surpass $1 trillion in 2025, solidifying its role in the debt capital markets of OIC countries and emerging markets. However, growth could be affected by risks including sharia-compliance complexities, geopolitical events, rising rates, and higher oil prices.
Led by the GCC and Malaysia, global sukuk issuances totalled $193.4 billion in 2024, a slight decrease from $197.8 billion in 2023.“Our forecasts assume no disruption from new standards, no major shift in global liquidity compared with our base-case expectations, and no major increase in geopolitical risk in the GCC region that could derail the economic performance of top issuers' countries of domicile,” writes S&P Global Ratings Islamic Finance head Mohamed Damak.
Total sukuk issuances in the GCC stood at a record high of $82.1 billion in 2024 against $56.1 billion in 2023 whereas non-GCC global sukuk issuances stood at $50.4 billion in 2024 compared to $65.1bn in 2023, Kamco Invest said in its latest report.“Higher Islamic debt issuances by Qatar and Saudi Arabia supported the growth in aggregate sukuk in the GCC in 2024,” Kamco said. Total bond issuances by GCC countries reached a record high at $103.4 billion in 2024, an increase of 71 per cent or $42.9 billion.
The UAE witnessed the biggest growth in bond issuances during the year at $49.7 billion compared to $31.2 billion in 2023, followed by Qatar that recorded a growth of $13.4 billion, according to Kamco. The UAE was followed by Saudi Arabia and Qatar with aggregate issuances of $30.8bn and $16.8bn, respectively.
Total sovereign bond issuances in the GCC stood at $33.3 billion in 2024 against $20.2 billion in 2023; while the GCC corporates saw issuances of $70.1 billion in 2024 compared to $40.3 billion in 2023, Kamco said.“We expect foreign currency-denominated issuance to remain strong in 2025,” S&P Global said in its analysis.
The agency also anticipates that monetary easing will persist, albeit at a slower pace than initially expected. This, coupled with substantial financing needs in core Islamic finance nations, particularly due to ongoing economic diversification initiatives, is expected to prompt issuers to capitalize on favorable market conditions.
The S&P report comes at a time of significant activity in Saudi Arabia's debt and sukuk markets. A December report from Kamco Invest indicated that Saudi Arabia would face the largest share of bond maturities in the GCC region from 2025 to 2029, reaching an estimated $168 billion.
Despite global geopolitical tensions, S&P Global forecasts that these will have little impact on sukuk issuance in 2025.
Analysts said as sukuk markets continue to evolve, experts are closely monitoring the interplay between regulatory changes, geopolitical factors, and market dynamics that could shape the future of this vital segment of global finance.
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