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null Islamic finance deals have the best start ever with oil up 40%


Islamic finance deals have the best start ever with oil up 40%

1 Apr 2022 | Friday Source: The Edge Markets

Global offerings of sukuk are off to their busiest start on record this year, with bankers at HSBC Holdings Plc and Deutsche Bank AG citing the high price of oil as a driver of the vibrant issuance.

Sales of new sukuk maturing in at least a year have touched nearly US$24 billion so far in 2022, the best start to any year, according to Bloomberg-compiled data going back to 1999. Saudi Arabia and Turkey were the two biggest issuers.

Although it slid on Thursday, crude is up roughly 40% this year, leaving investors in oil-producing countries, some of the biggest markets for Islamic finance, flush with cash. With fixed-income markets in upheaval as the US raises interest rates, Shariah-compliant debt has fared better than global bonds with investment-grade ratings, losing only 4% versus their 7% dive so far this year, according to Bloomberg indexes.

“There has been pent-up liquidity and demand for Islamic Sukuk for quite a while and that, coupled with challenging market conditions overall affecting primary and secondary markets, is driving increasing interest in sukuk issuance relative to conventional bond issuance,” said Khaled Darwish, Middle East and north Africa’s head of debt capital markets at HSBC.

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