Sukuk market is set to maintain its momentum this year

The global sukuk market is expected to keep the ball rolling well into 2025, with global issuances forecast to hit USD 190-200 bn this year, despite the spillover of geopolitical volatility in key sukuk markets, according to a report by global ratings agency S&P Global. As global liquidity conditions improve, FCY-denominated sukuk are set to account for USD 70-80 bn of the total volume this year — compared to USD 72.7 bn in 2024. Sustainable sukuk are expected to contribute around USD 10-12 bn — a slight increase from USD 11.9 bn last year.

This forecast follows a solid 2024 for the global sukuk market, with sukuk issuances totaling USD 193 bn, slightly down from USD 197.8 bn in 2023 due to tighter liquidity and fiscal constraints in Turkey and Pakistan. Meanwhile, total FCY sukuk taken to market were up 29% y-o-y to USD 72.7 bn last year, primarily driven by an uptick in borrowing activity from the GCC region led by Saudi Arabia, Malaysia, and Indonesia.

Monetary easing + geopolitical stability support the outlook: S&P sees monetary easing continuing, supporting the financing needs of major sukuk issuers, particularly in the GCC where diversification away from oil revenues trigger an expansion in financing needs, according to S&P. This accompanied by a stabilizing macroeconomy and supportive liquidity conditions should encourage issuers to debut more offerings.

A roadblock may be ahead: The sukuk market could face a shake-up in the coming years, with the expected downside risks of the Sharia Standard 62 by the Accounting and Auditing Organization for Islamic Institutions (AAOIFI) forecasted to take shape next year. If implemented, the new standard — which would shift the focus from contractual obligations to underlying assets — could increase sukuk issuance costs and introduce additional risks for investors, the rating agency wrote.

Want to go deeper in all things sukuk? Our favorite Islamic finance podcast Majlis & Markets by Hassan Jivraj covered the broader sukuk topic extensively — including Shariah standards 59 & 62 — with S&P Global Ratings’ Global Head of Islamic Finance Mohamed Damak and AAOIFI Secretary General Omar Ansari in two separate episodes.

MARKETS THIS MORNING-

Asian markets were mostly in the green this morning, following Wall Street’s mixed performance on the back of moves on tech stocks. Japan’s Nikkei was up 0.4%, while Shanghai Composite was down 0.2% in early trading. Meanwhile, Wall Street futures are slightly in the green as investors anticipate US inflation report.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.5% yesterday on turnover of SAR 6.1 bn. The index is up 1.1% YTD.

In the green: Nice One (+9.8%), Americana (+9.0%) and Cenomi Retail (+8.1%).

In the red: Savola Group (-2.2%), Buruj (-2.2%) and Spimaco (-2.1%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.3% yesterday on turnover of SAR 67.4 mn. The index is down 0.5% YTD.

In the green: Alashghal Almoyasara (+11.5%), WSM (+9.4%) and Quara (+6.0%).

In the red: View (-7.1%), Lana (-5.6%) and First Avenue (-4.5%)