Worldwide sukuk issuance market is set to rise in long-term primarily due to increasing demand for Islamic banking assets, according to a new report by Moody’s Investors Service.
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In addition, rise in standardisation of unsecured sukuk structures apart from promotion of Islamic financial services by Muslim nations are also expected to drive the global sukuk issuance market in the long-term.
In the last 10 years, the sukuk market saw growth in issuer and investor base.
As per the report, titled ‘Islamic Finance: Global Sukuk Market: Positive Long-Term Growth Trends Set to Continue’, issuance of sukuk amounted to around $50bn in 2013, which is lower than the record volumes of 2012.
Moody’s analyst and report co-author Rehan Akbar said the market depth is increasing with the emergence of amortising structures and more equity-like features.
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By GlobalData"Longer maturities in excess of five and seven years are now more common and Sukuk are becoming a growing part of issuers’ funding mixes for all types of borrowers," Akbar added.
Moody’s senior credit officer and report co-author Khalid Howladar said that Malaysia and the Gulf will continue dominate new issuance.
"The strong growth and high likelihood of continued sukuk issuances reflects the growing investor comfort with these instruments as well as the increasing funding needs of sovereigns, corporates and banks particularly in Islamic countries across the Gulf and Asia," Howladar added.
