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According to Moody's Investor Service, sukuk issuance will stabilise after growing for four consecutive years, supported by the deficit financing needs of some GCC sovereigns, amid weaker oil prices and higher sukuk refinancing. Moody's expects sukuk issuance of around $180bn in 2020, after a 36% rise in 2019 to $179bn. Global sovereign sukuk issuance increased by 31% to $119bn in 2019, from $91bn in 2018. Moody's noted that downside risks are rising in the short term because of the fallout from the coronavirus outbreak, as prolonged market disruption could dissuade issuers from coming to market. Green sukuk will benefit from robust growth in institutional investor demand for environmental, social and governance (ESG) products, given the natural crossover of sustainable investing and Islamic finance.

According to Moody's Investor Service, the Malaysian government is increasingly using longer-term Islamic instruments to fund its deficit to lower liquidity risk. The shift toward Islamic financial instruments is seen as credit positive for the sovereign. The Malaysian government has a sizable debt burden currently at 50.8% of the country's gross domestic product (GDP). The Malaysian Government Investment Issues (MGII), local currency, Shariah-compliant debt instruments, accounted for 50% of total federal government financing in 2017, up from a 26.4% share in 2008. The country's active participation in Islamic finance is part of Malaysia's broader vision to position itself as an international center for the instrument, and a recognized goal in the central bank's financial sector master plan.

Moody's Investors Service has assigned a provisional (P) Caa1 senior unsecured rating to the proposed US dollar Trust Certificates to be issued by The Second Pakistan International Sukuk Company Limited, a special purpose vehicle established in Pakistan, by the Islamic Republic of Pakistan. Moody's Caa1 government bond rating and stable outlook on Pakistan reflects the country's large but moderating fiscal deficits as well as its stabilizing external liquidity position. It also factors in high susceptibility to event risk, both on the political front and in terms of economic vulnerabilities that could arise. The (P)Caa1 rating assigned to the trust certificates is at the same level as Pakistan's Caa1 issuer ratings.

Moody’s Investors Service on Tuesday assigned to Sharjah Islamic Bank ( SIB ) issuer ratings of A3/Prime-2 and a stand-alone bank financial strength rating of D+, which is equivalent to baseline credit assessment (BCA) of baa3. The rating assignment reflects SIB’s very strong capital buffers, relatively low borrower and sector concentrations and satisfactory profitability and liquidity metrics, according to the rating agency. Moody’s assessment of Sharjah Islamic Bank’s franchise takes into account the growing importance of Islamic finance and associated franchise opportunities in the United Arab Emirates, according to the rating agency.

Moody's has assigned Bank Al Bilad a long-term credit rating of A2 and short term credit rating of P-1. Moody’s said that the ratings on Bank Al Bilad reflect the banks strong financial position, strong asset quality and coverage metrics, solid capitalisation levels and strong profitability resulting from growing business volume, efficiency gains and the solid contribution of non-funded revenues, in addition to the strong fundamentals of the Saudi economy supporting the growth in the banking sector. Moodys emphasised the importance of Islamic finance and associated opportunities in the Kingdom of Saudi Arabia.

Investment risk will still be the major rating constraint for Middle East insurers in the next 12 to 18 months. The statement came from Moody's Investor Services.
Moody's highlightes that the key driver behind this constraint on insurers' ratings is that those insurers' appetites for real estate exposure will probably remain strong despite the downturn in certain GCC property markets, and the elevated credit risk associated with real estate in the region.
Analysts anticipate insurers to keep up their relatively high exposure to real estate and equities.