Rating agency Moody’s has forecast that global sovereign and supranational sukuk issuance will reach record levels in the next two years recovering from the decline seen in 2018.
The report states that by 2020 issuance is likely to surpass the all-time high of $93 billion, reached in 2012. It is forecasting issuance to increase to $87 billion in 2019 rising to more than $100 billion the following year.
Such a forecast would see a stop to the decline that was seen in 2018 when levels dropped by 5% from the previous year, from $82 billion to $78 billion.
A key reason for the positive forecast is the growth of the sukuk market in the GCC region. According to the author of the report, Moody’s vice president and senior analyst Alexander Perjessy, gross issuance will rise further in the medium-term “as the sukuk issued by the GCC [Gulf Cooperation Council] governments begin to mature and are refinanced by new issuance”.
Two GCC sovereigns, Qatar and Saudi Arabia, have been among the most active promoters of the sukuk market. During 2018 sukuk issues covered nearly a third of Qatar’s fiscal deficit financing needs and around 14% for Saudi Arabia which also has the third largest stock of outstanding long-term sovereign sukuk at around $40 billion.
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