Global sukuk issuance is expected to reach between $200 billion and $210 billion this year, surpassing 2023’s total of just under $200 billion, according to Moody’s Ratings. Analysts at Moody’s predict that the sukuk market will continue to experience significant growth in the future, driven by new issuers entering the market to meet the increasing demand for sukuk instruments. The strong sovereign issuance in the GCC and Southeast Asia is cited as a contributing factor to this growth.
The GCC first-half issuance rose by 138 percent compared to the previous year, reaching $69.2 billion, with Saudi Arabia accounting for 37 percent of total issuance. Malaysia also played a significant role, issuing nearly 30 percent of all sukuk in the first half. The UAE saw a doubling of sukuk activity to $8.6 billion year on year, contributing to the overall strong first-half issuance in the region. Qatar’s issuance rose by 258 percent to $4.57 billion in the first half, while Oman and Bahrain also saw increased issuance due to higher financing needs.
Despite expectations of a slowdown in the second half of the year, with issuance estimated to be around $80 to $90 billion, the GCC countries are expected to maintain strong issuance levels. This is attributed to the region’s continued efforts to diversify their economies away from oil. Corporate and bank issuance volumes in the GCC rose to $19.6 billion in the first half of 2024, up from $11.6 billion a year earlier. Corporate issuance is expected to remain strong in the second half of the year, driven by increased demand and market scarcity.
The growing popularity of Islamic products beyond core Islamic markets, rising demand for green and sustainable sukuk, and the increasing diversity of Islamic instruments are cited as factors contributing to the growth of the sukuk market. Analysts expect that the pool of investors for sukuk will continue to expand, driven by the increasing appeal of the GCC region and growing investor confidence in the Gulf economies’ prospects. This coincides with the growing maturity of regional debt markets.
Green sukuk issuance is anticipated to accelerate in the coming years, supported by both government and private-sector issuers. Sustainability is becoming a key theme in public policy agendas, as well as investors’ strategies, leading to an increased focus on green and sustainable sukuk. The demand for green sukuk reflects a broader trend towards environmentally conscious investing and sustainable finance, which is expected to drive further growth in the sukuk market in the future.
