S&P Global Ratings believes that global sukuk issuance volumes will continue declining this year to total about $150 billion, compared with $155.8 billion in 2022 and $170.4 billion in 2021, according to a new report.

 

"We expect lower and more expensive global liquidity, increased complexity, and reduced financing needs for issuers in some core Islamic finance countries to deter the market," said S&P Global Ratings credit analyst Mohamed Damak.

 

However, S&P sees supportive factors in other areas. Corporates are likely to contribute to issuance volumes, particularly in countries with government transformation visions or plans, such as Saudi Arabia, where well capitalised banking systems will not have the capacity to finance all the projects.

 

Continued momentum

S&P also sees continued momentum via the energy transition and increased awareness of environmental, social, and governance considerations among issuers in key Islamic finance countries.

 

"However, the sukuk market seems to be lagging the conventional one when it comes to automation and issuance of digital instruments, which could accelerate growth and make the process more appealing," Damak concluded.-- TradeArabia News Service