KUALA LUMPUR, Sept 3 — Lower yields and key sukuk markets’ Covid-19-induced stimulus packages took centrestage in 1H 2020 as sovereigns and corporates took advantage of low interest rates to lock in cheaper financing.
RAM Rating Services Bhd (RAM Ratings), in a statement following its latest Sukuk Snapshot reports issuance, said global sukuk issuance fell 9.1 per cent year-on-year (y-o-y) in 1H 2020, bringing the total issuance value to US$65.6 billion (RM272 billion) compared with US$72.1 billion for the same period last year.
The weaker showing followed a 17.1 per cent reduction in sovereign issuance to US$39.2 billion in the same period (1H 2019: US$47.2 billion).
“Despite the general contraction, the spikes in sovereign sukuk issuance by Turkey (+56.2 per cent) and Indonesia (+46.0 per cent) helped cushion the declines in other key sovereign sukuk markets such as Malaysia (-69.3 per cent) and Saudi Arabia (-46.5 per cent).
“The slower time-to-market in sukuk issuance may have prompted some key sukuk markets to choose conventional bonds to fund their fight against Covid-19. That said, additional funding for stimulus packages may keep setting the pace for sukuk issuance in 2H 2020,” said RAM Ratings.
On another note, the quasi-government and corporate sectors posted a 6.1 per cent growth, with US$26.4 billion coming to market in 1H 2020 (1H 2019: US$24.9 billion).
“Malaysia remained the leading global sukuk market in both the corporate and quasi-government sectors, taking up the lion’s share of 41.5 per cent (US$11.0 billion), followed by Saudi Arabia (26.3 per cent or US$6.9 billion) and the United Arab Emirates (15.3 per cent or US$4.0 billion),” it added. — Bernama
