Global sukuk issuance to reach US$30b in 2010

By Muin Abdul Majid

DUBAI, Aug 23 (Bernama) -- The global sukuk issuance is expected to reach US$30 billion in 2010, according to a report prepared by Kuwait Finance House (KFH) Research Ltd.
It said the 2010 sukuk market would be driven by the recovery in global economic activity, record low interest rates, continued sovereign fund raising to support economic growth as well as revival of private sector projects.

"More sovereign and corporate issuers are anticipated in 2010, which include potential debuts from Japan, Thailand, Turkey, United Kingdom and Russia," it noted.

According to the study, sovereign sukuk issuances in the first half of 2010 were expected to help revive the global sukuk market as they provided the necessary benchmark pricing for the private sector to gauge investor appetite this year.
The report said over the years, the sukuk market had grown to reach approximately US$100 billion and contributed 12 % of the total global Islamic finance assets in 2009.

KFH Research said in the first half of 2010, total sukuk issued globally was valued at US$16.5 billion, 116.3 % higher than the US$7.6 billion raised in first half of 2009.

By country, Malaysia continued to dominate the global sukuk market, contributing 60.5 % of the total value of sukuk issued in first half of 2010, it said. Saudi Arabia and Indonesia each trailed at 14.1 %.
By currency type, ringgit-denominated sukuk deals topped at 53.4 %, followed by US dollar deals at 10.3 % and Qatari riyal issues, at 8.3 %.

The report indicated that the long-term prospects for the sukuk market were expected to remain strong. This was based on the increasing popularity of syariah-compliant products, governments' support for Islamic finance, huge investment and financing requirements in the Gulf Cooperation Council (GCC) and Asia, and issuers' desire to tap investors from the Middle East and Muslim Asia.

"With a healthy array of sukuk in the pipeline, the market is attracting interest from an increasing number of issuers in Muslim and non-Muslim countries alike," it added. -- BERNAMA