IslamicFinance.de

Oil’s rally from a 12-year low has gone far enough to revive demand for Islamic bonds, but not so far that frequent issuers aren’t still in need of funds. Stimulus efforts in oil-producing nations helped drive sales of Islamic bonds up 34% to $37.5 billion in 2016, after dropping to a five-year low in 2015. A two-year slump in energy markets has compelled governments in Malaysia and the Middle East to boost debt sales to finance projects built in partnership with private companies. S&P Global Ratings estimates that weak energy prices will leave Gulf Cooperation Council countries with $560 billion of funding needs from 2015 through 2019. According to Apostolos Bantis, head of credit research at Commerzbank AG in Dubai, GCC sukuk activity will rise next year and there will be some first-time issuers.

Syndicated lending by Saudi Arabian banks has increased by almost twice in 2012, according to Bloomberg. On the contrary, syndicated lending has slowed overall in the Middle East and North Africa as it fell by 5 percent this year registering its first decline since 2009. The Shariah-compliant bond market is mostly driven by privately held companies in Saudi Arabia, the largest Arab economy, as they keen to access the public debt markets and thus earn higher yields.