08/01/2014 09:16 AST

Total sukuk issuances in December stood at $14.1 billion, an increase of $6 billion over last November, bringing the total sukuk issuances for 2013 to about $120 billion, KFH-Research, a subsidiary of Kuwait Finance House Group, KFH group, said in its sukuk monthly report on Tuesday.

The report added that Saudi Arabia, the United Arab Emirates and Qatar issued sukuk of $3.3 billion during December, while Malaysia whose currency is the ringgit came in the first place in terms of issuance volume and Saudi riyal came in third place after the ringgit and the US dollar in terms of the currency issuance.

Moreover, the report explained that sukuk issuance during the month of December reflected investors' desire to get cheaper funding rates. According to the report, the total issuance of sukuk during December was 126 compared to 53 in November, and 66 in October 2013.

The share of the corporate sector was 97 issuances while the total sovereign issuances was 22 and related governmental bodies issued 7 issuances in December 2013. Thus, the share of sukuk issuances by companies was 66 percent of the primary market in December 2013, while sovereign bodies sukuk counted for 32.3 percent. December saw another significant amount of sukuk sales, totaling $14.1 billion (November: $8.3 billion), as expectations for the Federal Reserve to taper bond purchases intensified given back-to-back positive jobs reports.

Fears that the Fed's taper will cause interest rates to rise further has triggered a wave of issuance during the 4Q13 (up 68.5 percent q-o-q) with issuers looking to take advantage of cheaper funding rates. Total Issuance volume for 2013 came in at $119.7 billion, 8.7 percent less than in 2012.

Malaysia accounted for the largest share of the sukuk market during the month with 72.8 percent of the issuance total. December saw new issuances from a number of jurisdictions such as the UK, Yemen and Singapore, which collectively accounted for 1.8 percent of issuance volume.

Qatar, Saudi Arabia and the UAE continue to witness strong growth this year with further issuances amounting to $1.5 billion, $1.1 billion and $750 million respectively during the month. Notable issuances during the month include the $1.25 billion paper by Qatar's Ooredoo Tamweel Limited. Its debut sukuk has a yield of 3.039 percent or 160bps over mid-swaps, which is directly comparable to the conventional bonds of Qtel (Qatar Telecom). The books were 400 percent oversubscribed having passed subscriptions worth $4.5 billion. The sukuk was given a rating of A+ by Fitch and has a 5-year maturity.

Corporate issuers made up 66.0 percent of the primary market in December, while sovereigns accounted for 32.3 percent and government related entities took the remaining 1.7 percent. The Malaysian ringgit accounted for 72.8 percent of issuances during the month, followed by the US dollar (14.2 percent) and the Saudi riyal (7.6 percent).

A total of 126 sukuk were issued in December versus 53 sukuk in November and 66 in October. Among these, 97 were issued by the corporate sector totaling $9.3 billion (November: $2.2 billion, +330.5 percent), 22 by sovereigns totaling $4. 5 billion (November: $5.8 billion, -21.8 percent) and 7 by government related entities worth $237.1 million (November: $312 million, -24.0 percent).


Saudi Gazette

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