Malaysia remains a formidable force in global sukuk market in 2020

DESPITE the impact of the pandemic on the global economy and economic sentiment, global sukuk (Islamic bond) issuance rose 16.8% to US$152.6 bil in 2020 (2019: US$130.6 bil).

Top sukuk markets continue to be dominated by Malaysia with a market share of 39.2%, followed by Saudi Arabia (20.4%) and Indonesia (17.5%).

Collectively, these markets contributed 77.1% of total global sukuk issuance, according to RAM Ratings.

“The contagion impact of COVID-19 saw steady issuances from sovereigns in 2020 to finance stimulus packages in support of the pandemic-ravaged economies,” the rating agency pointed out in the latest release of its Sukuk Snapshot publication.

“Supportive monetary policy and strong government spending were key in boosting local economies.”

As a result, sovereign issuances increased 9.2% year-on-year (yoy) to US$87.5 bil in 2020 (2019: US$80.1 bil). Three sovereign heavyweights – Indonesia with its 29.9% market share (US$26.2 bil), Malaysia with 28.2% (US$24.6 bil) and Saudi Arabia with 20.7% (US$18.1 bil) – accounted for more than two-thirds of global sovereign issuance in 2020.

Similarly, the corporate sector combined with quasi-government issuance saw a steady rise by 28.8% yoy to US$65.1 bil (2019: RM50.5 bil) with Malaysian corporate sukuk issuance representing 53.9% (US$35.1 bil) of the pie.

Saudi Arabia’s sukuk market also saw a steady rise in issuance in recent years with its corporate sector growing by 39.8% to US$13.0 bil (2019: US$9.3 bil). The financial services sector was the common denominator in these core markets, providing a stable sukuk issuance base.

These markets with strong domestic sukuk also supported local currency sukuk with ringgit-denominated sukuk contributing 36.5%, Indonesian rupiah (15.8%) and Saudi Riyal 14.4% of total global sukuk issuance.

RAM’s Sukuk Snapshot is designed as a quick reference point for sukuk data and trends. This publication aims to serve the needs of market practitioners, enabling them to monitor global and Malaysian sukuk market developments.

Subscribers can retrieve the Sukuk Snapshot via RAM Ratings website Non-subscribers may purchase the report at RM500 per copy. – April 1, 2021

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