RAM Ratings says shari'ah-compliant securities accounted for 53% (or RM33.1 billion) of government, quasi-government and corporate debt issues in Q116. The company expects RM100 billion to RM120 billion of gross issuance for the domestic sukuk market in 2016, underscored by the government of Malaysia’s ongoing efforts to deepen the sukuk market through the issuance of Islamic securities to finance its budget deficit.
The latest issue of RAM’s Sukuk Snapshot reports that of the RM28.5 billion of government securities (Islamic and conventional) issued as at end-March 2016, about 51% constituted Islamic securities. This was followed by the government's fifth global sukuk issuance of US$1.5 billion in April.
Indonesia is in second place, after Malaysia, in terms of
global sukuk issuance by country as at end-2015, with a 12% market share
(or US$8.2 billion) ahead of Saudi Arabia’s 10% (US$6.4 billion). “We are closely monitoring Indonesia’s progress in the sukuk arena, which is quickly gaining traction,” said Ruslena Ramli, RAM’s Head Islamic Finance. Indonesia, with a projected GDP growth of 5.5% this year, has the economic momentum to rival its peers in tapping the global sukuk market vis-à-vis funding its fiscal deficit, says RAM, which stated that Indonesia is still firmly committed to promoting sukuk issuance as part of its government’s efforts to finance its budget deficit while deepening the local bond market.
As at end-March 2016, Indonesia maintained its lead with a 15% share (or US$2.8 billion) of global sukuk issuance - compared to Saudi Arabia’s 11% (or US$2.1 billion) - and looks set to continue its trajectory in expanding its Islamic finance market. For the same period, Malaysia’s better performance (inclusive of foreign-currency issuance) brought global sukuk issuance to US$18.9 billion in total while strengthening its own contribution to 57% (or US$10.7 billion).
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The monthly Sukuk Snapshot is designed as a quick reference point for sukuk data and trends. Subscribers can read the Sukuk Snapshot via the RAM website. Non-subscribers may purchase the report at RM530 (inclusive of GST) per copy. For further enquiries, call Ain at +603 7628 1108