An uptrend in global sukuk issuance has been projected for 2024, with the market expected to cross $1 trillion in the medium term, according to Fitch Ratings, despite geopolitical events, monetary tightening, and fluctuating oil prices. Last year ended with the global outstanding sukuk market expanding by 10.3% year-on-year to reach $850 billion, despite volatilities with the ongoing Israel-Gaza conflict.
In core markets such as the GCC, Malaysia, Indonesia, Pakistan, and Türkiye, sukuk had a 29% debt capital market issuance share in all currencies last year, down from 35% in 2022, and 40% share in US dollars, down 1.6% from the previous year. US dollar sukuk issuance in core markets (including multilaterals) rose by 40% year-on-year to $52 billion, while US dollar bonds were up 53%. However, sukuk issuance in all currencies in core markets fell by 19% year-on-year.
In the GCC, US dollar sukuk issuance rose 178% over the same period. The credit profile of Fitch-rated sukuk issuers remained stable overall in 2023, with 79.2% investment grade, up from 78.1% the previous year.
The share of stable outlooks also grew last year, jumping to 93.6% in 2023 from 69.9% in 2022. The positive outlooks though significantly fell to 3.6% from 20.6% in 2022, mainly linked to the sovereign upgrades of Saudi Arabia and Oman.
“We did not see any major sukuk default or additional credit-related complexities in 2023,” said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings, said in a statement.
He added: “We also saw pockets of growth in 2023 despite volatilities. Funding and diversification goals are likely to drive 2024 issuance.”
In 2024, sukuk will continue being a sizeable part of the funding mix in core markets, the report added. Fitch has further forecast lower oil prices and interest, which could drive issuance in 2024 and 2025.—Zawya
