Sovereign borrowers are driving a resurgence in Islamic finance with the total value of sukuk issued in 2017 on track to reach $95 billion.
The prediction, from ratings agency Moody’s, indicates growth of 12% compared with the previous year’s total issuance of $85 billion.
“Sovereigns have underpinned a recovery in the global sukuk market this year,” said Christian de Guzman, a senior credit officer at the agency. “We expect sovereign sukuk issuance volumes will continue to grow in 2018 as governments look to diversify their financing mix and satisfy the liquidity needs of Islamic retail banks.”
According to Moody’s predictions, sovereigns will issue about $148 billion in sukuk in 2018, leading to a significant expansion of the market.
Although Malaysia has historically been the largest issuer of sukuk, Gulf countries led by Saudi Arabia are taking a larger share of the market as their governments raise money to offset the effects of low oil prices.
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