The sukuk market should continue on its current positive growth trajectory in 2020, following stronger-than-expected performance in 2019, S&P Global Ratings says in its "Sukuk Market To Continue Expanding In 2020, Barring Event Risk" report.
"We anticipate total sukuk issuance of $160bn-170bn this year, including $40bn-$45bn of foreign currency issuance. This represents about 5% growth on the $162bn seen in 2019," said S&P Global Ratings head of Islamic finance Mohamed Damak.
Abundant global liquidity and negative yields on more than $10tn of debt mean that issuers with a good credit story will find relatively easy entry to the sukuk market in 2020.
Therefore, barring an abrupt turn of the economic cycle or a significant deterioration in the geopolitical environment, S&P thinks issuers from core Islamic finance markets (the GCC, Malaysia, Indonesia, and Turkey) will maintain good access to the sukuk market. The international rating agency believes new FinTech propositions in the Gulf are likely to open the market to small and midsize issuers.
"In addition, given the increasing commitment to the Principles of Responsible Investments, we think that the green sukuk market will continue to expand, aided by opportunities related to energy mix diversification in the GCC/Malaysia and investor diversification," Mr Damak said.