IslamicFinance.de

Sukuk issuance could potentially take a hit this year, dragged by subdued economic growth. In 2018, when Malaysia’s GDP growth slowed to 4.7%, sukuk issuances fell by 2.6%. In 2019, when real GDP growth moderated further to 4.3%, sukuk issuances slipped by 2.3%. However, the current low interest-rate environment will prevent sukuk issuances from falling too significantly this year. According to Malaysia Rating Corp (MARC) chief economist Nor Zahidi Alias, the downside risk remains especially if the Covid-19 outbreak continues to be unmanageable and lockdown periods across global economies continue. Policymakers globally are using fiscal and monetary tools to soften the impact of the Covid-19 outbreak. The US Federal Reserve’s move to lower its benchmark to a near-zero rate prompted central banks across many sukuk active markets to cut their interest rates.