Global outstanding sukuk issues hit $82.2b in July

Dubai: The global outstanding sukuk issues totalled $82.2 billion by the end of July 2007 and close to 62 per cent of these were denominated in Malaysian ringgit, according to Moody's Corporate Finance.

Moody's believes that the prospects for the markets in sukuk and Islamic financing in general are very encouraging in Asia, and this outlook goes beyond predominantly Muslim countries.

"Globally, the Malaysian market now accounts for most outstanding sukuk, but interest is growing in the rest of Asia, obviously in jurisdictions such as Indonesia and Pakistan, but also, for example, in Singapore and most recently Hong Kong," said Dominique Gribot-Carroz, a Moody's assistant vice-president.

Gulf-based issuers account for more than 30 per cent of the outstanding issues. For the first six months of the year, regional firms issued $6.30 billion worth corporate sukuk against $9 billion worth issues for the whole of 2006.

According to Moody's, India and Pakistan are two markets that have huge potential. "Though still in a nascent stage compared to Malaysia, the Pakistan market is expected to grow significantly over the coming years," Gribot-Carroz said.

Despite its large Muslim population, India's progress in Islamic finance has been slow. But the fast pace of India's growth, coupled with huge funds required for infrastructure development, Moody's expects India to open huge opportunities for Islamic finance.

Sukuk demand in Malaysia significantly exceeds supply according to Bank Negara Malaysia. Currently, more than 70 per cent of all Malaysian corporate borrowings are Islamic.

Large transactions such as the sale of a $1.50 billion sukuk by Dubai's DP World and $1.25 billion sukuk by the Dubai International Financial Centre have buoyed this year's figure.