GLOBAL: The ringgit has
been displaced as the most preferred Sukuk currency as the Malaysian legal
tender plummets to historic 17-year lows amid a plunge in Chinese equities
and decline in global oil prices.
A comparison of Dealogic data reveals that the ringgit, which was the top
currency for Sukuk issuance this time last year at US$19.9 billion, has
been supplanted by the industry’s next favorite: the US dollar. Latest
12-month rolling data from Dealogic puts US dollar Sukuk at US$22.1
billion, a comfortable margin ahead of the ringgit which clocked in at
US$14.1 billion. This is a stark difference from a year before when the US
greenback was closing in on the Malaysian currency by US$4 billion – half
of the gap this time around – before overtaking the ringgit at the end of
2014 but only by a small margin.
There are several overlapping factors underpinning the drop in ringgit
Sukuk. The weak performance of the currency amid global volatilities has
triggered a slowdown in the domestic bond and Sukuk market. Issuers and
investors have been circumspect about tapping the asset class and analysts
expect the market to remain subdued for the rest of the year. The pullback
from corporate issuers also comes at a time when Bank Negara Malaysia – one
of the world’s largest Sukuk issuers – decided to cease its short-term
Sukuk program, causing a 42.5% sink in global Sukuk volume in the first six
months of the year. The exit of the central bank, who commanded almost 40%
of total international Islamic bond offerings in 2014, has left a wide gap
in the ringgit Sukuk landscape.
As the ringgit takes a back seat in the Sukuk sphere, the phenomenally
strong US greenback on the other hand has been surging forward. Rising as
one of the best performing currencies so far this year, regular local
currency Sukuk issuers have also tapped the dollar market this year
including Malaysia with its US$1.5 billion facility in April and Indonesia
who issued US$2 billion in Sukuk a month later. With several dollar Sukuk
already in the pipeline, including one from Saudi Arabia’s Arab Petroleum
Investment Corp as part of its US$3 billion Sukuk program, the greenback
Islamic bond market share is anticipated to expand further, while market
observers are less optimistic that ringgit Sukuk levels could rebound to
the higher levels of last year due to the currency’s ongoing depreciation
and the prevailing risk-averse sentiments.
|
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.