IslamicFinance.de

Sukuk issuance plunged in the first five months of this year after Malaysia’s central bank stopped issuing short-term Islamic bonds, data from Standard and Poor’s showed. Issuance fell to US$33.7 billion in the year to May 31, down from $50.5bn in the same period of last year, according the rating agency’s figures. Bank Negara Malaysia (BNM) was responsible for about $10bn of sukuk issuance last year, mostly in short-term sukuk with tenors of three months. Overall sukuk issuance excluding BNM was down 5.1 per cent against the previous year’s figure of $35.5bn. Demand for sukuk from investors outside the Islamic world has been significant, but a shortage of supply characterises an industry segment in which highly-rated sovereign issuances are sought after and many times oversubscribed. The collapse in the price of oil could further harm sukuk issuance.