GulfBase Live Support
Global Islamic bond, or sukuk, issuance could shrink as much as 28% this year amid tightening liquidity in developed markets from higher interest rates, and rising geopolitical risk in the Middle East, according to S&P Global Ratings (S&P).
Mohamed Damak, S&P’s head of Islamic finance, says total sukuk issuance is likely to decline to around US$70 billion-$80 billion, or 18%-28%, from $97.9 billion in 2017.
Higher interest rates in the US and Gulf Cooperation Council (GCC) countries, and the European Central Bank's plan to scale back asset purchases are expected to reduce demand for sukuk, Mr. Mohamed says in a research report on January 7.
"Overall, we think that liquidity from developed markets channelled to the sukuk market will reduce or become more expensive," he writes.
Rising geopolitical risk in some GCC countries is also likely to hurt demand.
"The continued animosity between Iran and the GCC countries is not helping the investment climate," the report says.
According to S&P data, investors from GCC countries are the largest buyers of sukuk, accounting for 46% of the total outstanding as at end-December.
Meanwhile, slow progress on the standardisation of Islamic finance products will continue to hold the sukuk market back from its full potential, Mr. Mohamed says.
Although some industry players think standardisation for cross-border sukuk is unrealistic, he believes it is achievable.
"It will boost issuance volumes, and restore the attractiveness of the instrument to issuers through a smoother and faster issuance process," he says.
Asia Asset Management
The State Bank of Pakistan (SBP) said yesterday that prospects for economic growth remain strong, noting that the economy is poised to achieve the growth target of 6% for 2017-18. In its first quart
The prospect of strong economic growth in 2018 presents leaders with a golden opportunity to address signs of severe weakness in many of the complex systems that underpin our world, such as societies
Global investment in renewable energy and energy-smart technologies reached $333.5 billion last year, up 3 per cent from a revised $324.6 billion in 2016, and only 7 per cent short of the record figu
Times of Oman
Malaysian sovereign wealth fund Khazanah Nasional has launched exchangeable sukuk to raise US$309.4 million to US$320.8 million.
The zero-coupon sukuk are exchangeable into H-shares of Ci
British inflation eased off its post-Brexit vote high in December, official data showed on Tuesday, suggesting the financial squeeze on many households could be about to get a little bit easier.