Sukuk issuance inches up by 11.6% in 1Q of 2022: Fitch Ratings

Doaa A.Moneim , Tuesday 12 Apr 2022

Sukuk issuance globally grew by 11.6 percent in value in the first quarter (1Q) of 2022 to post $64.5 billion, driven by sovereigns and multilateral institutions despite the ongoing challenges, Fitch Ratings said in a report on Tuesday.

Fitch Ratings
Fitch Ratings

However, the report said that the market volatilities and the seasonal pattern of the Muslim holy month of Ramadan could affect this growth over the medium term.

“Higher oil prices could virtually eliminate new financing needs from GCC sovereigns, with all expected to run surpluses except Bahrain. Nevertheless, the longer-term view of the sukuk market continues to be solid, supported by issuance from net oil-importing sovereigns, upcoming debt maturities, and funding diversification strategies across sectors. Most sukuk issuers in core markets have little direct exposure to the Russian-Ukrainian war, although indirect exposure varies,” said Bashar Al-Natoor — Fitch’s global head of Islamic finance.

According to the report, global outstanding sukuk rose to $722.8 billion by the end of 1Q of 2022, which is 1.5 percent higher than the level reached by the end of 2021. 

The report also showed that the total Fitch-rated sukuk outstanding inched up by 2.1 percent in 1Q of 2022 to post $135.2 billion, with 79 percent of sukuk ratings being investment-grade and 88.5 percent of issuers having a stable outlook.

In emerging markets, sukuk issuance growth was stronger than bonds as total dollar-denominated sukuk issued in these markets — excluding China and multilateral institutions — jumped by 97 percent in 1Q of 2022, while bond issuance rose by 7.6 percent. 

In January — prior to the Russian-Ukrainian war — the Ministry of Finance said that it will issue the first of its kind sovereign sukuk bonds with a total value of $2 billion before the end of 2022 for the sake of providing finances for the government’s investment projects.

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