KUALA LUMPUR, April 22 ― The global outstanding sukuk reached a total of US$715.2 billion (RM2.94 trillion) in the first quarter of 2021 (1Q21), 3.0 per cent higher than the fourth quarter of 2020 (4Q20), said Fitch Ratings.
In a note today, it said sukuk issuance with a maturity of more than 18 months from the Gulf Cooperation Council (GCC) region, Malaysia, Indonesia, Turkey, and Pakistan reached a total of US$9.9 billion in 1Q21, similar to levels in 4Q2020.
“The volume of Fitch-rated sukuk reached US$119.1 billion at end-1Q21, with 80.7 per cent being investment-grade and the rest were speculative-grade,” it said.
According to Fitch Ratings, the sukuk issuance momentum is expected to continue for the rest of 2021, supported by intact investor appetite for sukuk and as issuers seek to diversify funding and to meet upcoming maturities.
“Although higher oil prices, less pandemic-related support, and the economic recovery could result in lower sovereign funding needs, one-off or infrequent sukuk issuance is expected to support 2021 volumes.
“The sukuk market is also affected by emerging market and global trends, including the impact of rising US Treasury yields on fixed-income markets,” it added.
In 1Q21, Fitch Ratings noted that sukuk pricing compared to bonds continued normalising to pre-2020 levels.
“Fitch looked at 30 sukuk and comparable bonds from 10 issuers from the GCC region, Malaysia, Indonesia and Turkey. During normal market conditions, their prices are strongly correlated.
“In the three years to March 5, 2020, the average spreads between them were low at -11bp. Between March and June 2020, however, sukuk were sold at steeper discounts than bonds,” it said. ― Bernama
