Sovereign Sukuk issuance stable, SEA leads on volumes


London—Malaysia (A3 stable) and Indonesia (Baa3 stable) continue to regularly issue long-term sovereign Sukuk while Gulf countries have favoured conventional debt structure to finance their deficit, says Moody’s Investor Services. On balance, Moody’s Investors Service considers that issuance levels will be in line with historical levels and may approach $28 billion in 2016.
“The robust pipeline of issuances planned for the rest of 2016 points to a stable flow of sovereign Sukuk this year,” says Mathias Angonin, an Analyst at Moody’s. “While the governments of Cote d’Ivoire, Senegal and Sharjah returned to the sovereign Sukuk market in 2016, issuance volumes are primarily supported by more regular issuers, such as Indonesia, Malaysia and Turkey, whose annual borrowing requirements have featured Shari’ah-compliant instruments for several years,” says Gabriel Torres, a Vice President and Senior Credit Officer at Moody’s.
Moody’s report, entitled “Sukuk-Issuing Sovereigns Global Sovereign Sukuk Issuance Remains Stable Amid Lower Corporate Sukuk Issuance” is available on Moody’s subscribers can access this report via the link provided at the end of this press release. The rating agency’s report does not constitute a rating action.
As oil prices dropped and deficits soared, Moody’s says Gulf Cooperation Council (GCC) countries have favoured conventional structures over Sukuk. Even so, sovereign Sukuk issuance continues: so far in 2016, the government of Oman (Baa1 stable) issued its first Sukuk, while Sharjah (A3 stable) issued its second.—Agencies