Standard & Poor's Rating Services

S&P: Global sukuk issues to stay below peak levels

Standard & Poor's Rating Services (S&P) expects sukuk issuance to remain at below-peak levels in 2016 mainly because Bank Negara Malaysia (BNM), the largest issuers of sukuk worldwide, has stopped issuing Islamic notes. In absence of its biggest issuer, the rating agency expects sukuk issuance to reach US$50 billion-US$55 billion (RM219.5 billion-RM241.45 billion) in 2016, compared with US$63.5 billion in 2015 and US$116.4 billion in 2014.
Excluding the BNM effect, S&P said sukuk issuance dropped by around 5% in 2015 from 2014. Three main factors are expected to shape the performance of the sukuk market in 2016: monetary policy developments in the US and Europe, the drop in oil prices, and the possible lifting of sanctions on Iran.

S&P halves forecast for global sukuk issuance

Warning that the global sukuk market is heading toward a correction in 2015, Standard & Poor’s Rating Services (S&P) has halved its forecast for global sukuk issuance in 2015 as major issuer Bank Negara Malaysia (BNM) switches to other instruments to finance the government’s spending. The global ratings agency said it was revising its forecast for total sukuk issuance in 2015 to about $50 billion to $60 billion from $100 billion to $115 billion, assuming there will be no issuance from BNM in 2015. In a statement, S&P said the move by BNM to stop issuance leaves the door open to issuers such as the International Islamic Liquidity Management Corp (IILM) and the Islamic Development Bank (IDB) to step up their issuance and provide the industry with liquidity, thereby contributing to the development of an Islamic yield curve.

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