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Global sukuk up by 36.1% yoy, hits $252.3B in 2021

Egypt is getting ready to launch its first issuance of Islamic sukuk during Q4 of the current fiscal year

By: Business Today Egypt

Wed, Jan. 12, 2022

Global Islamic bonds (sukuk) saw significant growth in 2021, climbing 36.1% year-on-year (YoY) to reach $252.3 billion, with central banks, governments, and multilateral institutions dominating sukuk issuances, explained Fitch Ratings.

Egypt is getting ready to launch its first issuance of Islamic sukuk during Q4 of the current fiscal year (2021/2022) – around April and June – with an expected total value of $1.25 billion as part of the government’s plans to diversify its budget’s financial resources and finance development investments.

Local currency sukuk dominated issuances in 2021, accounting for 80% of all bonds issued, according to Fitch’s “Global Sukuk Outlook Dashboard: 2022.” Accordingly, Fitch-rated sukuk reached $132.4 billion in 2021, 80.1% of which were investment-grade, it added.

“Growth will be anchored by robust Islamic investor appetite, funding diversification goals, and Islamic-finance development agendas in a number of countries. Downside risk stems from higher oil prices reducing a number of sovereigns’ funding needs, AAOIFI-compliance complexities, traditional risks such as interest-rate rise, lower global investor appetite for emerging-market debt, and political risk,” said Bashar Al-Natoor, the global head of Islamic finance at Fitch Ratings.

Despite challenges faced by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), including COVID disruptions and higher oil prices, sukuk saw growth with Fitch expecting the volume of sukuk to maintain its growth in 2022.

On the other side, share of sukuk issuers with negative outlooks fell to 8.8% in Q4 of 2021, down from 23.4% in the same period in 2020.

Malaysia, Indonesia, Turkey, and Pakistan issued a total of $230.2 billion of sukuk in 2021, while non-core market sovereigns such as the UK, Maldives, and Nigeria also issued sukuk.

The global outstanding sukuk volume also inched up by 12.7% in 2021 to reach $711.3 billion, according to Fitch.