Dubai: S&P Global Ratings is maintaining its global sukuk issuance forecast at about $160 billion-$170 billion following the market's good performance over the first half of 2024.
Total issuance reached $91.9 billion over the first six months of this year, up slightly from last year's $91.3 billion. But a notable difference is the 23.8 per cent increase in foreign currency issuances, which reached $32.7 billion by June 30, 2024, up from $26.4 billion a year earlier.
Still, core Islamic nations in Africa is missing in the drive. The main contributors to this increase were issuers from Saudi Arabia, United Arab Emirates (UAE), Oman, Malaysia, and Kuwait.
Improved visibility on the medium-term trajectory of interest rates has benefited foreign currency-denominated sukuk issuance, which expect the US Federal Reserve to start cutting rates in December 2024.
Simultaneously, high financing needs in core Islamic finance countries explain the increased issuance, which is notably funding an ongoing economic transformation program in Saudi Arabia and strong growth in the UAE's non-oil economy.
Adopting Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) Standard 62 guidelines-as they have been presented-could disrupt the market, S&P said.
The global rating firm added that this will not affect 2024 issuance but will likely be a consideration from next year.
