Global sukuk issuance reached $44.2 billion during the first half of 2018, as against $52.2 billion recorded during same period of 2017 marking a fall of 15.3 per cent, said S&P Global Ratings in a new report.

This drop was even more pronounced for foreign currency sukuk issuance at 45 per cent.

“We believe that this is due to the absence of major issuances from the GCC countries seen in 2017,” said S&P Global Ratings head of Islamic Finance, Mohamed Damak.

“In the second half of 2018, we expect sukuk issuance volumes will continue to be slowed by the global tightening of liquidity conditions as well as by lower financing needs of some GCC countries as a result of oil prices stabilizing at higher levels,” he added.

The sharp increase in geopolitical risks in the Middle East will also likely weigh on investors' appetite. Meanwhile, inherent challenges related to the sukuk market continue to drag on expansion of this market, S&P said in the report.

“That said, we think that Malaysia will continue to support market growth, owning to its strong market foundations and government support for Islamic finance. Overall, we maintain our expectations for volume of issuance at $70 billion-$80 billion in 2018,” said Damak. – TradeArabia News Service