GCC sovereigns will push global sukuk issuances to $130 bln: Moody’s

Total sukuk issuance will reach $120 billion to $130 billion in 2019, supported by higher deficit financing needs of some GCC sovereigns amid moderate oil prices and higher sukuk refinancing needs, Moody’s said in a recent report.

Sukuk issuance grew by five percent last year to $119 billion, following a 31 percent rise in 2017 to $113 billion.

Corporate issuance in asset-backed sukuk will remain limited due to more attractive conventional market opportunities, the report said, adding sukuk issuance from these sectors could be a source of growth underpinning the industry's longer-term potential.

“The English court's ruling on the Dana Gas case upholding creditor's rights alleviated market concerns, which further supports the industry's outlook,” Moody's stated.

Meanwhile, Islamic financing asset growth will remain stable and will continue to outpace conventional counterparts, underpinned by sovereigns' continued strategic objective to grow the Islamic finance industry and continued demand for Islamic products by bank customers, particularly individuals.

Mergers between Islamic and conventional banks in the GCC could also drive one-off increases in assets in 2019 and 2020, the rating agency added.

Globally, Saudi Arabia still remains the largest market for Islamic finance, with Islamic financing assets increasing to $295 billion as of September 2018 from $287 billion in December 2017, the report added.