PETALING JAYA: Despite expectations of a sluggish performance by the global sukuk market this year, lower yields and key sukuk markets’ Covid 19-induced stimulus packages took centre stage in first-half 2020 (H1’20), which Sovereigns and corporates took advantage of low interest rates to lock in cheaper financing, RAM Ratings said in a statement.
Global sukuk issuance fell 9.1% year on year in H1’20, bringing the total issuance value to US$65.6 billion, compared to US$72.1 billion during the first half of last year. The weaker showing followed a 17.1% reduction in sovereign issuance to US$39.2 bil in the same period, from US$47.2 billion in H1’19.
Despite the general contraction, the impressive spikes in sovereign sukuk issuance by Turkey (+56.2%) and Indonesia (+46%) helped cushion the declines in other key sovereign sukuk markets such as Malaysia (-69.3%) and Saudi Arabia (-46.5%).
“The slower time-to-market in sukuk issuance may have prompted some key sukuk markets to choose conventional bonds to fund their fight against Covid-19. That said, additional funding for stimulus packages may keep setting the pace for sukuk issuance in 2H’20,” RAM Ratings said.
It noted that the quasi-government and corporate sectors posted a 6.1% growth, with US$26.4 billion coming to market in H1’20.
Malaysia remained the leading global sukuk market in both the corporate and quasi-government sectors, taking up the lion’s share of 41.5% (US$11.0 billion), followed by Saudi Arabia (26.3% or US$6.9 billion) and the United Arab Emirates (15.3% or US$4 billion).
source https://www.thesundaily.my/business/sovereign-sukuk-dominate-issuance-in-first-half-2020-JH3832946
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