Welcome to the first joint publication of RAM Ratings and INCEIF, the only university in the world dedicated to Islamic finance. This quarterly publication marks another collaboration between the two organisations which leverages on their respective Islamic finance expertise. Expanding on RAM’s previous Sukuk Snapshot, the rebranded Sukuk Market SNAPSHOT now also zooms into unique and noteworthy sukuk structures, highlighting financial innovation and advances in sukuk structuring.
For the first nine months of 2021, global sukuk markets continued to reach new heights, recording USD655.8 bil in outstanding sukuk, even as the ramifications of the 2020 health crisis that sparked a worldwide contagion continue to influence the future outcomes of global economies and financial markets. Sovereign sukuk issuances, which have traditionally been the mainstay of sukuk markets, continued to tap into sukuk markets to help support economic recovery and diversify funding. Recovery in global oil prices, the ramping up of vaccinations and gradual border and economic re-opening suggest that sovereign sukuk activity — especially in GCC countries — will slow down in 4Q 2021 and as we enter 2022. Until solutions are found to address the implementation of the AAOFI’s Standard 59 in some GCC jurisdictions, the sukuk pipeline in affected GCC countries may be dampened for a while yet. For YTD September 2021, core sukuk market like Malaysia, Indonesia and Saudi Arabia led sovereign sukuk issuances, making up close to 80% of total sovereign sukuk.
Corporate sukuk remains a less active market in most sukuk markets, except in Malaysia where it constituted a sizeable 37.1% of issuances as at end-September 2021. That said, the third quarter of this year still saw several notable transactions, including Bangladesh Export Import Company Limited’s USD0.36 bil Green Sukuk — the subject of this quarter’s Sukuk Structure Focus — and a return of domestic corporate sukuk issuances in Qatar and Egypt.
