Riyadh: Sukuk Issuance Set to Soar in 2024
In a report released by Fitch Ratings, it is predicted that global sukuk issuance will continue to rise in the coming months of this year. This growth is primarily driven by funding and refinancing demands in the market.
Factors Driving Sukuk Market Growth
Apart from funding needs, the steady development of the sukuk market can also be attributed to economic diversification efforts in the Gulf Cooperation Council region and the maturation of the debt capital market. However, potential risks such as new Shariah requirements, geopolitical uncertainties, and high oil prices could impact the issuance.
Fitch highlighted that corporates and projects may still rely on bank funding, but the government’s push to develop the debt capital market and reduce bank dependence could lead to increased sukuk issuance.
Surpassing the Trillion-Dollar Mark
The GCC debt capital market has already reached $940 billion in outstanding sukuk and is on track to exceed the $1 trillion mark. Around 80 percent of GCC sukuk is now investment-grade, with Saudi Arabia, UAE, and Malaysia expected to remain active issuers.
Global Sukuk Market Overview
According to Fitch, global outstanding sukuk grew by 10 percent year-on-year to $867 million by the end of the first quarter, with GCC countries contributing 35 percent of this total. Malaysia continues to dominate the global market, with around 60 percent of its ringgit DCM in sukuk.
Sustainable Growth and Digitalization
S&P Global also projected steady sukuk issuance in 2024, driven by higher financing needs in key Islamic finance countries and improving liquidity conditions globally. The agency believes that digitalization could streamline sukuk issuance processes, albeit requiring standardization of legal documents and Shariah interpretation.
Furthermore, the report anticipates a rise in sustainable Shariah-compliant bond volumes following the success of the UN Climate Change Conference in Dubai last year.