Cross-Border Corporate Sukuk Set to Rebound, Predicts Moody’s
According to a recent report by Moody’s Investors Service, cross-border corporate sukuk issuance is expected to experience a significant upswing after reaching lows in 2022. The majority of this increase will come from companies based in the Gulf Cooperation Council (GCC) countries and Malaysia, known for their robust sukuk markets. Moody’s Vice President and Senior Analyst, Maisam Hasnain, noted that year-to-date cross-border corporate sukuk issuances have already doubled the volume seen in the entire year of 2022, reaching $5.2 billion as of 18th May 2023. This positive trend is anticipated to continue.
The surge in sukuk issuance this year can be attributed to various factors. Firstly, companies that delayed their issuance plans in the previous year due to market volatility are now moving forward with their sukuk offerings. Secondly, businesses are seeking to refinance their near-term sukuk maturities, taking advantage of improved market conditions. Lastly, first-time-rated sukuk issuers are entering the market to diversify their funding sources and benefit from the favorable environment.
Moody’s has rated several notable sukuk programs in 2023, including a $3 billion program initiated by Saudi Electricity Company (SEC, A1 positive) and a $5 billion program launched by Malaysia’s sovereign wealth fund, Khazanah Nasional Berhad (A3 stable). These programs demonstrate the ongoing confidence in sukuk as an attractive financing option for both corporate and government entities.
The rebound in cross-border corporate sukuk issuance signals a renewed investor appetite for Islamic financial instruments. The sukuk market, known for its adherence to Shariah principles and long-term investment potential, is poised for growth and presents a promising avenue for companies to raise capital. As companies seize the opportunity to access funding, the market is expected to expand and diversify.
Overall, the anticipated increase in cross-border corporate sukuk issuance is a positive development for the Islamic finance industry. It reflects the market’s resilience and highlights the growing acceptance and recognition of sukuk as a viable financing tool for companies operating in the GCC and Malaysia. As economic conditions stabilize and investor confidence strengthens, the outlook for the sukuk market remains optimistic, paving the way for continued growth and innovation in the sector.
Read More here: https://www.zawya.com/en/islamic-economy/islamic-finance/cross-border-corporate-sukuk-is-set-to-increase-from-2022-lows-says-moodys-jdbfboxl
