Moody's Forecasts Gulf Sovereign Sukuk Issues to Hit $34bln in 2020
2020-08-12 - 5:52 p
Bahrain Mirror: Sukuk issuance by Gulf sovereign borrowers is expected to rise to around $34 billion this year, from $25 billion in 2019, as funding needs rise as a result of lower oil prices and the coronavirus crisis, Moody's said.
Thaddeus Best, lead analyst at Moody's sovereign risk group, said on Tuesday the forecasted increase in Gulf sukuk issuance is primarily driven by Saudi Arabia, which Moody's expects to issue $27 billion in sukuk this year, up from $19 billion.
"We also could see a bit of an increase from Oman to $3 billion this year and Bahrain to $1.5 billion. As you can see, it's really Saudi there which is increasing," Best added.
Although global issuance of Islamic bonds is expected to snap a four-year growth streak in 2020, Moody's said it is still expected to be at the second-highest volume, with the rise in the Gulf partly offsetting a drop from Southeast Asia.
"We expect sukuk issuance to rally to $90 billion in the second half of 2020, driven by sovereigns in the GCC (Gulf Cooperation Council), Malaysia and Indonesia," Moody's said in a report.
Global sukuk issuance fell 12% to $77.4 billion in the first half of 2020 while issuance from the six GCC states increased 7% to $28.5 billion, Moody's said.
Overall sukuk issuance from the UAE, Bahrain and Kuwait increased to a combined $15 billion in the first half of 2020 from $10.8 billion a year earlier, supported by higher issuance by Bahrain.
The UAE was the fifth largest sukuk issuer in the first half, particularly due to increased sukuk sales by corporate and financial institutions.