Global Sukuk Market Growth to Continue in 2021 and Beyond

Sukuk supply is expected to rise in the second half of 2021 after it showed strong growth during 2Q21, supported by strong investor appetite and issuers’ refinancing and funding diversification needs, Fitch Ratings says. Seasonal patterns will affect quarterly sukuk issuance which, following the summer break, is expected to pick up in the remainder of 2021 and beyond.

The sukuk market experienced strong market activity in 2Q21 after a slower 1Q21, driven by big-ticket issuance from the Saudi Arabian Oil Company (the largest corporate sukuk issued to date) and the Indonesian, Turkish and Omani sovereigns. The growth was driven by issuers aiming to diversify their funding and taking advantage of the low interest-rate environment amid continued fiscal deficits and still-challenging economic conditions. Investor demand remains intact due to new sukuk supply scarcity and the global hunt for yield.

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