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IFIS publishes global sukuk market H1 2009 report

Egypt: Monday, August 31 - 2009 @ 14:04

The report shows that global sukuk issuances continue to decline standing at $9.23bn at June 30th 2009, 20% less than H1-2008.

This decline is most significant in the Gulf Cooperation Council (GCC). However, GCC recovery is expected in Q1 2010.

This Year SEA returns to dominate the sukuk market with total issuances reaching $7.8bn, representing 88% of total global sukuk issuances for the H1-09. Only 12% of H1-09 issuances came from the GCC, with total worth of $1.1bn.

While Malaysia has usually dominated the global and South East Asian sukuk markets, the crisis seems to have created an opportunity for Indonesia to play a more significant role. Indonesia’s sukuk issuance in H1-09 has grown by an impressive 93% year on year, reaching $1.47bn.

H1-09 has also witnessed the very first sukuk market developments in Singapore with the announcement of the reverse enquiry sukuk by the Monetary Authority of Singapore and the first actual sukuk in Singapore by City Developments Limited worth $66.45m solely arranged by CIMB Islamic.

For the first time, AmInvestment Bank Bhd has topped IFIS H1-09 Sukuk Arrangers and Bookrunners rankings followed by Bank Negara Malaysia (BNM). BNM’s ranking was boosted by the MYR5bn Retail sukuk in May 2009. CIMB Islamic Bhd and HSBC Amanah have fallen to third and fourth places respectively.

The report further details some recent high profile defaults, and discusses the possibility of Nakheel defaulting on its $3.5bn sukuk. The report states that Abu Dhabi is likely to find it in its best interest to bail out Dubai, and by extension Nakheel, to avoid the consequences of such a default.

The report concludes with future prospects of the sukuk market. In the GCC, three main issues are hindering the revival of the sukuk market, namely, troubled Kuwaiti investment companies, the real estate market in the UAE, and the availability of credit in Saudi Arabia. As for Malaysia and South East Asia, the recovery of the sukuk market has already started, with issuance increasing by 29% in Malaysia and 93% in Indonesia. But the Malaysian economy is too integrated with the global economy for it to recuperate outside the framework of a global recovery, and the sukuk market will follow that trend. With some key macroeconomic figures still deteriorating in Malaysia, this recovery is a precarious one.

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Monday, August 31- 2009 @ 14:04 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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