After five consecutive years of growth, global sukuk issuances will be flat or slightly lower this year as higher crude prices have reduced oil-rich Gulf governments’ funding needs, Moody’s said.
The decline comes despite issuances rising in the first half of the year by 3 percent to $102 billion, driven by sales from Malaysia and Indonesia.
Issuance volume declined 19 percent in the Gulf Cooperation Council (GCC), while they rose 22 percent in Southeast Asia, Moody’s Investors Services said.
“Sukuk issuance will be flat or slightly lower this year, as higher oil prices have reduced sovereign funding needs in GCC countries,” says Ashraf Madani, a VP-Senior Analyst at Moody’s and the author of the report.
“We expect total gross short- and long-term sukuk issuance in 2021 to reach between $190 billion and $200 billion after a record $205 billion in 2020,” he added. The Gulf oil producers have seen their finances improve on the back of a recovery in crude oil prices.
Brent is now trading at around $72, up from lows reached last year when the COVID pandemic-induced lockdowns reduced demand.