"Global sukuk issuance will be flat or slightly lower this year," Moody's said on Tuesday, after five consecutive years of strong growth as higher crude prices reduced the financing needs of oil-rich Gulf governments.
The projected volume comes despite issuance in the first half of the year increasing 3% to $102 billion, driven by sales from Malaysia and Indonesia. Issuance volume in Southeast Asia, which accounted for more than half of all issuances in the first half, increased by 22% while in the GCC it decreased by about 19%.
Moody's sees total sukuk issuance this year at between $190-$200 billion from $205 billion last year, as continued large financing needs in Malaysia and Indonesia will lead to strong issuance.
The economies of the Gulf states, which depend heavily on oil and gas, were dealt a double blow from last year's historic oil price crash and the pandemic. Brent crude is now trading at around $72, nearly its lowest level in March last year, while activity in the Gulf's non-oil sectors see recovery.
"The sukuk issuance in the UAE and Bahrain declined 65% to $4 billion in the first half," Moody’s said, expecting it to continue its growth in long-term.
Meantime, volumes will be boosted by acceleration in the issuance of instruments such as green sukuk, and new issuers, such as Saudi oil giant Aramco and the Malpes.
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