Sukuk markets hit new highs with Far East push
Manama, May 29, 2013
The last two years were a record for sukuk issuances with the market registering $137 billion in 2012 and this trend is expected to continue with growth driven particularly by issues in the Far East, said an industry expert.
"This year has also started on a positive note and as per the report more than$11 billion worth of sukuk was issued in January,” Ijlal Ahmed Alvi, chief executive of International Islamic Financial Market (IIFM) was quoted as saying in the Gulf daily News, our sister publication.
The IIFM yesterday released its IIFM Sukuk report, which consists of a comprehensive study of the global sukuk market, at the ninth annual World Islamic Funds and Financial Markets Conference (WIFFMC 2013) at the Gulf Hotel in Bahrain.
The research report sheds light on the growth and development of international and domestic sukuk issuances from 2001 to 2013.
Sukuk issuances reached $92.4 billion in 2011 noted Alvi, adding that growth had been particularly strong in the Far East with Malaysia continuing to lead the market while, with government support, Indonesia was now becoming a major player.
With the growth in issuance, there were now signs of growth in the secondary market.
The report also highlights the different sukuk structures used by international issuers as well as sukuk structures used at domestic level by various jurisdictions active in issuing them.
The report also contains selected sukuk case studies in the international sukuk market, providing deeper understanding of the mechanism and uniqueness of the most popular commonly used fixed profile instruments in the Islamic capital and money market.
"An interesting trend or innovation in sukuk issuances also highlighted by this report is sukuk issuance in non-local currency such as an issuer based in the UAE issuing a sukuk in Malaysian ringgit and a issuer based in Malaysia issuing a sukuk in Chinese yuan," Alvi said.
"This is another positive development and will certainly further contribute to the development of the sukuk market.
"The risk arising from currency or rate of return mismatches can be managed by Islamic hedging documentation and product standards being published by IIFM and The International Swaps and Derivatives Association and will provide further confidence to investors in sukuk," he added. – TradeArabia News Service