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Global Sukuk issuances witnessed a 25.6% hike last year from 2018 numbers, with foreign currency issuances leaping 20.8%. This was driven by high levels of liquidity in Indonesia, good performance in Malaysia, Turkey's efforts to tap all available financing sources and the return of some GCC issuers to the market. According to S&P, total Sukuk issuance for 2020 is expected to reach $160 billion-170 billion this year, including $40 billion-$45 billion of foreign currency issuance. The research and ratings agency added that ample global liquidity and negative yields on more than $10 trillion of debt mean that issuers with a good credit story will find relatively easy entry to the Sukuk market this year. S&P pointed out several global themes that bode well for Islamic finance, technological innovation, sustainable investments and diversification, will continue to open the market to new players particularly small and midsize issuers.

A new report on the prospects for fintech in the Middle East and Africa has affirmed the importance of the Gulf Cooperation Council (GCC) region. According to Standard & Poor's, the GCC's most advanced centres are Dubai and Bahrain. "The Future Of Banking: Fintech's Prospects in the Middle East and Africa" report identified five factors necessary to propel fintech adoption: human capital, regulation, financial capital, physical infrastructure and demand, either from established financial institutions or end users. It said North and Sub-Saharan Africa still lagged behind the GCC, where banking penetration stands at just under 80%.

The favourable outcome of Nigeria’s first Sukuk issuance suggests that it is as a veritable financing option for the country. However, global rating agency Standard & Poor’s says its outlook for the market remains uncertain in 2018. According to S&P analysts, total issuance will likely decline to $70 billion-$80 billion in 2018 from the over $97 billion recorded in 2017. The analysts noted three main reasons for their expectations including a likely tightening in global liquidity, mounting geopolitical risks and slow progress on the standardization of Islamic products. They expect that the cost of funding for issuers will rise and that liquidity from developed markets channeled to the sukuk market will reduce. A major concern is the slow pace of standardization of Islamic finance products.

Standard & Poor's downgraded Qatari real estate developer Ezdan Holding on Monday. Therefore, yields on the company's $500 million sukuk jumped by about 2 percentage points after the downgrade. S&P cut the Qatari company by two notches to BB from BBB-minus and revised its outlook to negative from stable. The rating agency cited a weakening of the company's financial risk profile partly caused by the neighbouring Arab countries' boycott of Qatar. Ezdan's sukuk, issued in 2016, were yielding around 6% last week, now the yield has surged to over 8%. The sanctions have worsened a slump in Qatar's real estate market. Housing and utility prices sank 4.7% from a year ago in September, their biggest drop for at least several years, and fell 0.7% from the previous month.

Sources say, the emirate of Sharjah has hired HSBC to set up a US-dollar sukuk programme because its government is looking into borrowing to reduce its budget deficit. A first issuance under the newly set sukuk programme is expected in the 4th quarter 2017 according to sources. HSBC has not yet commented on this. The government of Sharjah did not respond either.
Sharjah debted capital market before, having issued a $750 million 10-year sukuk in 2014 and a $500 million 5-year sukuk in January 2016. Sharjah is rated BBB+ by Standard & Poor's. The agency affirmed its credit rating and outlook last month, citing Sharjah' social and political stability, and the emirate's low external risks derived from its membership in the United Arab Emirates. The rating however is constrained by the emirate's limited monetary flexibility, due to the fact that the UAE dirham is pegged to the US dollar, and the underdeveloped domestic bond market, S&P said.

Corporate and infrastructure sukuk issuance in the Gulf region and Malaysia has continued to stagnate so far this year and this may carry over to the coming quarters, according to S&P Global Ratings. Despite the slump, essential infrastructure funding requirements, low interest rates, and investors' appetite for Islamic assets in their portfolios continue to be supportive for the world's core corporate sukuk markets.

In the GCC, corporate and infrastructure sukuk issuance totalled $2.5 billion in the first eight months of 2016, compared with $2.3 billion for the preceding eight months. Versus the same periods in 2013 and 2014, issues are down sharply from $5 and $6.5 billion, respectively, S&P said.
"Further out, we see possible brighter prospects for issuing corporate and infrastructure sukuk over the medium to long term. We estimate that Gulf government spending on projects alone - including infrastructure contracts awarded over 2016-2019 - could be about $330 billion," said S&P Global Ratings analyst Karim Nassif.

Standard & Poor's (S&P) is inspecting again the credit ratings on 50 banks in the Middle East and North Africa under a new set of criteria, a move that could arise in higher funding costs for lenders already hit by the euro zone crisis and the Arab Spring revolts.
The agency reduced its ratings on 15 big global banks last month, mostly in the Europe and the US, because of the revamp of its ratings criteria.
JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Goldman Sachs, Barclays Plc and HSBC Holdings Plc were among the banks that had their ratings cut by one notch each.