Global market conditions will remain supportive for sukuk issuance in second-half 2021, with low interest rates and abundant liquidity, said S&P Global Ratings in a new report.

Most Islamic finance countries will continue vaccinating their populations and oil prices will stabilize at about $65 per barrel for 2021, said the report titled “The Global Sukuk Market Is Returning To Traditional Risks”.

Taken together, these factors point to stronger sukuk market performance in 2021 compared with 2020, it added.

"We expect sukuk issuance will reach $140 billion-$155 billion in 2021, compared with $139.8 billion in 2020. In first-half 2021, sukuk issuance totalled $90.6 billion, compared with $86.4 billion at June 30, 2020, thanks to Malaysian and Saudi Arabian issuances," said S&P Global Ratings credit analyst Mohamed Damak.

“By contrast, we saw a 50% drop in sukuk issuance in the United Arab Emirates due to the adoption of the Accounting and Auditing Organization for Islamic Financial Institutions' Sharia Standard 59. Although issuers have found ways to comply with the standard, additional challenges persist. In our view, investors are also now more exposed to residual asset risks

“More broadly, downside risks for the sukuk market remain but they are slowly shifting toward traditional factors such as geopolitical concerns and oil price fluctuations. Notably, the evolution of the pandemic also remains a relevant concern," Damak concluded. – TradeArabia News Service