GLOBAL: Sukuk issuers of
the GCC are anticipated to postpone their plans of tapping the
international Islamic bond market until after June, opined RAM Ratings in
its Global Sukuk Outlook 2015. Ascribing the potential delay to
uncertainties in global oil prices, the rating agency expects issuers to
hold back until the full effects of soft oil prices, including on their
credit standing, are thoroughly understood by potential investors. Weaker
oil prices aside, other compounding factors fueling market uncertainty for
both issuers and investors include current regional geopolitical turmoil in
the Middle East, easing monetary policies in Europe and possible rate
increase by the US Federal Reserve.
Malaysia is expected to maintain its lead in the global Sukuk market,
commanding the majority (60-70%) of international issuance. “Although
ringgit-denominated Sukuk issuance was rather slow off the block this year,
issues from the infrastructure sector and financial institutions as well as
some supply of Islamic securities from Bank Negara Malaysia are expected to
keep Malaysia in the lead, with about 60-70% of the global Sukuk market
issuances,” confirmed Promod Dass, the deputy CEO of RAM.
Yet, despite the tepid start in 2015, RAM nonetheless projects that at
least US$100 billion in new global Sukuk issuance will come to market this
year, with a strong probability of that figure hitting US$120 billion. The
rating agency is not the only one optimistic of the market’s performance
for this year, as industry players are convinced that the sector would
likely outperform 2014. “I am optimistic that this pace of issuance will
continue and that full year 2015 volumes will exceed last year’s record
numbers,” said Andy Cairns, the managing director and head of global debt
origination for the National Bank of Abu Dhabi, to IFN (For an in-depth
exploration on the topic, see IFN’s latest Cover Story: ‘A banking boom:
The competitive market for Sukuk sales’).
Four months into the year, and the world has welcomed innovative and
landmark issuances including Emirates Airline’s UKEF-backed deal,
Petronas’s US$1.25 billion paper as well as the government of Ras Al
Khaimah’s US$1 billion offering. And the pipeline is looking strong for the
next 18 months: apart from potential sovereigns from Kenya, Tunisia,
Jordan, Oman and Egypt (See IFN Report Vol 12 Issue 15: ‘Sovereign Sukuk –
positive progress’), institutional players have also revealed plans to
raise funds through the Islamic debt capital markets including Noor Bank,
CIMB Group and Garuda Indonesia among others.
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