PHOTO
Sukuk, or Islamic bonds, issuances in Saudi Arabia have risen 37 percent in calendar year 2021, S&P Global Ratings, with Saudi corporate and government entities raising $36.9 billion sukuk in 2021, compared to $27 billion in 2020 and $28.6 billion in 2019.
In 2021, while the global sukuk issuance reached $147.4 billion compared with $148.4 billion in 2020, foreign-currency denominated sukuk issuance increased by 10 percent.
Jumbo issuances in Saudi Arabia (for example the Saudi Aramco Sukuk) have contributed to this increase along with continued issuance growth in Malaysia, Indonesia, and--to a smaller extent--Turkey, due to favorable market conditions and ample liquidity.
The issuance of capital boosting instruments by some of the GCC banks seeking these same favorable conditions also provided a boost.
"We expect the volume of issuance in 2022 to hover around $145-150 billion and believe that the implementation of national transformation plans such as the Saudi Vision 2030 will lead in some opportunities for sukuk issuances," the ratings agency said in a report.
S&P sees also opportunities created by the energy transition in core Islamic finance countries, higher ESG awareness from regional issuers, and stronger automation using fintech solutions as likely to support future sukuk market growth. For instance, in January 2022 Saudi National Bank issued a $750 million sustainable sukuk.
(Writing by Brinda Darasha; editing by Seban Scaria)
Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© ZAWYA 2022
