New Telegraph

Report: Global Sukuk issuance raise $100.9bn in H1’22

Global sukuk issuance raised $100.9 billion in the first half of 2022, slightly lower than the $104.2 billion issued during H1’21, according to the 2022 Sukuk Perceptions and Forecast Study by Refinitiv. Mustafa Adil, Head of Islamic Finance, Refinitiv, an LSEG business, said: “A new Sukuk issuance record had been set in 2021 for the fifth consecutive year, reaching a total of $196.5 billion.

 

Although this was up by 8.2 per cent from $181.6 billion in 2020, that compares with the much greater average annual growth of 21 per cent, in the previous five years.” The report projects that global Sukuk issuance will moderate in 2022, settling at $185 billion by the end of the year.

 

Issuance is projected to then grow by 6.4 per cent annually over the next five years, reaching $257 billion in 2027. Total Sukuk outstanding is projected to reach $742.3 billion by the end of the year and $1.1 trillion by 2027. Although economic and geopolitical developments earlier in the year had a muted impact on Sukuk markets, issuance nonetheless eventually slowed on the back of multiple policy rate hikes and persistently high oil prices.

Even so, robust demand for sukuk and growing inflation-induced budgetary pressures on economies such as Malaysia, Indonesia and Pakistan have buoyed global issuance during H1, and continue to do so in the short term.

 

“Despite a strong start to the year, issuance momentum slowed as the Federal Reserve and other central banks kicked off a global monetary tightening cycle. The surge in oil prices also contributed to the slowdown in issuance, as it reduced government borrowing needs in core sukuk markets,” Adil added.

Issuance began to moderate in the second quarter due to smaller issuances by the Saudi Government, whose funding requirements reduced amid soaring oil revenues. The kingdom reported a $21 billion budget surplus in Q2, boosted by an 89 per cent increase in oil income from the previous year.

 

Despite this, the government has pledged that its spending will not be influenced by oil price movements and will continue to curb spending this year, signalling smaller issue sizes ahead. International Sukuk issuance slowed in H1’22 although there had been strong activity from issuers during Q1, benefiting from strong demand from foreign investors. International sukuk raised $22 billion in H1’22, down 10 per cent from $33.2 billion in H1’21.

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