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Emirati sukuk issuances made up 40% of total sustainable sukuk issuances worldwide in 2023, with AED 15.45 bn green and sustainable sukuk issuances in the first 11 months of the year, according to S&P Global’s sukuk outlook 2024 report. S&P attributed the UAE’s market contribution to the hosting of COP28 in November, and the Securities and Commodities Authority’s (SCA) decision to waive registration fees from sustainable bonds.
Some AED 28.7 bn worth of sukuk (c. USD 7.8 bn) went to market in the UAE over the first six months of 2023, up from the AED 24.6 bn (c. USD 6.7 bn) posted over the entire 12 months of 2022, according to the CBUAE’s Islamic Finance Report 2023 (pdf).
Global sukuk issuances cooled off in 2023: Global sukuk issuances fell by 6.1% y-o-y to USD 168.4 bn during the year on the back of Saudi Arabia’s monetary tightening measures and Indonesia’s lower fiscal deficit, according to the S&P’s report. However, the drop was offset by higher-value FX-denominated issuances in the UAE, Saudi Arabia and a handful of new sukuk issuers, such as the Philippines and Egypt, according to the report.
Local currency-denominated sukuk also fell, but not here: While local currency-denominated sukuk issuances declined globally by 16.8% y-o-y, they increased in the Emirates due to the government launching AED-denominated T-Sukuk.
Moody’s called it: Moody’s Investors Service expected that global sukuk issuances in 2023 would fall to range between USD 150-160 bn “on lower volumes from major sovereign issuers, mostly reflecting an improving fiscal position across the Gulf Cooperation Council (GCC) countries and South-East Asia,” the ratings agency projected last September.
Financial pressures to propel issuances in 2024: Issuances in the UAE are expected to increase over the upcoming years on the back of the government’s efforts to grow the local capital market. The ratings agency also projects that global sukuk issuances will rebound and reach between USD 160-170 bn (AED 588-624 bn) in 2024, “thanks to higher financing needs in some core Islamic finance countries and potentially easing global liquidity conditions,” it said.
