A leap in sales of Islamic sukuk

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DUBAI (Reuters) – Standard & Poor’s, the global credit rating agency, said on Monday that sales of… Islamic Sukuk Denominated in foreign currencies, they rose by 41.6% in the first half of 2021 as issuers concluded massive sukuk sales in a market characterized by low interest rates and increased liquidity.
The agency added in a report that sukuk issuances rose five percent in the first half of 2021 compared to the previous year, while optimistic market conditions are expected to support more Islamic bond sales in the second half. Initial sukuk issuance volumes rose 20 percent in the same period.
Affected by the decline in oil prices last year and the impact of the Corona virus pandemic, issuers have steadily turned to international debt markets to cover the lack of financial resources.
Standard & Poor’s expects global Islamic bond issuance to range between $140 billion and $155 billion this year from $139.8 billion in 2020. Sukuk issuance reached $90.6 billion in the first half of 2021, up five percent from $86.4 billion at the end of the year. June 2020, backed by the sale of Islamic bonds by the Malaysian and Saudi governments.
“Although issuers have found ways to comply with that standard, additional challenges remain,” Standard & Poor’s said. From our point of view, investors are now more exposed to the risk of assets remaining after debt is repaid.”
Sukuk sales also declined in Indonesia and Turkey in the first half.
The agency added that it expects Gulf governments to continue hammering the debt markets, thus reducing the fiscal deficit, despite higher oil prices and Brent crude trading at $76 on Monday.
The agency also expects the issuance of banks and companies to support the sukuk market in the second half of the year, after a lull in corporate activity in the first half of 2020, with its tendency to provide liquidity and suspend spending in the face of the pandemic.





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