S&P Global Ratings is keeping its global sukuk issuance forecast steady at around $160 billion-$170 billion, following strong performance in the first half of 2024.
The total issuance reached $91.9 billion in the first six months of this year, slightly higher than the $91.3 billion recorded last year. A significant change was the 23.8% rise in foreign currency issuances, which amounted to $32.7 billion by June 30, 2024, compared to $26.4 billion the previous year.
However, core Islamic nations in Africa are notably absent from this growth. The main contributors to the increase were issuers from Saudi Arabia, the United Arab Emirates (UAE), Oman, Malaysia, and Kuwait.
Improved clarity on medium-term interest rate trends has benefited foreign currency-denominated sukuk issuance, with expectations that the U.S. Federal Reserve will begin reducing rates in December 2024.
Additionally, high financing needs in core Islamic finance countries have driven the increased issuance, particularly funding Saudi Arabia's ongoing economic transformation program and strong growth in the UAE’s non-oil economy.
The adoption of Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) Standard 62 guidelines, as currently presented, could potentially disrupt the market, according to S&P.
The global rating agency noted that while this will not impact 2024 issuance, it is likely to be a factor from next year onward.
News Source: Emirates News Agency
