Sukuk Issuance Drive to be Sustained in 2021 Despite Challenges

Sukuk issuance momentum is expected to continue for the rest of the year, supported by intact investor appetite for sukuk and as issuers seek to diversify funding and to meet upcoming maturities, Fitch Ratings says. Although higher oil prices, less pandemic-related support, and the economic recovery could result in lower sovereign funding needs, one-off or infrequent sukuk issuance is expected to support 2021 volumes. The sukuk market is also affected by emerging market and global trends, including the impact of rising US treasury yields on fixed-income markets.

Total global outstanding sukuk reached USD715.2 billion in 1Q21, 3% higher than in 4Q20. Sukuk issuance with a maturity of more than 18 months from the GCC region, Malaysia, Indonesia, Turkey and Pakistan reached USD9.9 billion in 1Q21, similar to levels in 4Q20. The volume of Fitch-rated sukuk reached USD119.1 billion at end-1Q21, with 80.7% being investment-grade and the rest speculative-grade.

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