Market volatilities, alongside Ramadan’s seasonal market pattern, could affect this growth in the medium term, explained the report
Driven by sovereigns and multilateral institutions, sukuk issuance grew by 11.6% in value worldwide during the first quarter (Q1) of 2022 hitting around $64.5 billion, according to a Fitch Ratings report.
Global outstanding sukuk rose to $722.8 billion by the end of 1Q of 2022, representing a rise of 1.5% compared to the end of 2021.
Market volatilities, alongside Ramadan’s seasonal market pattern, could affect this growth in the medium term, explained the report.
“Higher oil prices could virtually eliminate new financing needs from GCC sovereigns, with all expected to run surpluses except Bahrain. Nevertheless, the longer-term view of the sukuk market continues to be solid, supported by issuance from net oil-importing sovereigns, upcoming debt maturities, and funding diversification strategies across sectors. Most sukuk issuers in core markets have little direct exposure to the Russian-Ukrainian war, although indirect exposure varies,” said Bashar Al-Natoor — Fitch’s global head of Islamic finance.
Total Fitch-rated outstanding sukuk climbed by 2.1% in Q1 of 2022, recording $135.2 billion. According to the report, 79% of sukuk ratings being investment-grade and 88.5% of issuers having a stable outlook.
In emerging markets, sukuk issuance growth was stronger than bonds as total dollar-denominated sukuk issued in these markets,excluding China and multilateral institutions, jumped by 97% in 1Q of 2022, while bond issuance rose by 7.6%.
Prior to the Russian-Ukrainian conflict, the Ministry of Finance said, in January, that it will issue the first of its kind sovereign sukuk bonds with a total value of $2 billion before the end of 2022 for the sake of providing finances for the government’s investment projects.
