|
GLOBAL: 2014 was a
phenomenal year for the Sukuk market. Marked by the entrance of new
(non-traditional) sovereign players, global Sukuk issuance last year
surpassed that of 2013 at US$116.4 billion against US$111.3 billion, and
analysts are expecting yet another solid year for Sukuk despite potential
emerging headwinds brought on by the global economic climate.
“Supporting Sukuk issuance is the still-positive economic performance of
core markets such as nations in the GCC and Malaysia; the implementation
of new regulatory requirements such as Basel III liquidity coverage
ratio; and increasing interest in Sukuk from countries that have not yet
tapped the Sukuk market looking to diversify their investor base,”
expounded S&P credit analyst Mohamed Damak, who is also the agency’s
global head for Islamic finance. “At the same time, we foresee turbulence
ahead that could cause overall issuance volumes to be lower in 2015.”
Forecasting Sukuk issuances to exceed the US$100 billion mark this year,
but within the range of US$100-115 billion, the relatively conservative
estimate is premised upon the apparent likelihood of the US Federal
Reserve to increase its benchmark interest rate in the second quarter of
2015, which will likely reduce global liquidity. S&P, however, adds
the caveat that: “We cannot rule out that emerging market instruments
will benefit, as a side-effect, from the monetary stimulus that the
European Central Bank is likely to implement in 2015.”
More significantly however, the projection takes into consideration the
current trend in global oil prices. Despite comfortable fiscal and
external buffers in a number of GCC countries, S&P cautioned that
plunging oil prices could shake investor confidence and subsequently
affect Sukuk issuance.
Nonetheless, the company says that the global Sukuk market would continue
to be buoyed by healthy economic growth in the GCC (average 3.7%) and
Malaysia (5.5%), and is expected to see a continuation in the trend of
new sovereign issuers tapping the Islamic debt capital markets. The
implementation of Basel III and the dearth of high-quality Shariah
compliant liquid assets may prompt governments and central banks to issue
Sukuk to meet the industry’s need for liquidity management instruments.
|
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.