GCC corporate, infrastructure #sukuk outlook uncertain

According to Standard & Poor’s, favourable market conditions supported the growth of corporate and infrastructure sukuk issuance across the GCC in the first nine months of 2017, but the outlook for 2018 is uncertain. Issuance in this segment increased to $6.8 billion (Dh24.97 billion), up from $2.8 billion during the same period of 2016. This growth suggests improvement in overall capital market activity, even though the number of corporate sukuk issuers remains low. Rising infrastructure needs and relatively low interest rates were the two support factors for corporate and infrastructure sukuk. GCC banks traditionally operate with high levels of capital, but analysts expect Basel III to make less of it available for project finance. That could make issuers consider capital market options in the form of conventional project finance debt or sukuk as an alternative to bank finance.