Global Sukuk market down by 31.4 pct in July -- report

KUWAIT, Aug 5 (KUNUA) -- The global primary sukuk market issuances amounted to USD 7.95 billion in July compared to the USD 11.6 billion in June, down 31.4 percent, according to a report by Kuwait Finance house (KFH).

The subdued volume comes as corporate issuances stalled in July on account of the holy month of Ramadan, KFH noted, adding that corporate issuers throughout the global markets remained absent from the primary market with the exception of few corporate sukuks issued in Malaysia and a sole corporate sukuk issued in Indonesia.

The report also said that these corporate sukuks produced a volume of USD 1.16 billion or less than 15 percent of the new issuances market share in July as compared to the bumper USD 5.24 billion volume or 45.3 percent market share in June.

However, the most important limelight of the month lies in the debut of the Sub-Saharan African nation of Senegal in the global sukuk market, said KFH, adding that the Government of Senegal priced its maiden sovereign sukuk deal on 18th July, worth West Africa CFA Franc (XOF) 100 billion, equivalent to approximately USD 200.5 million.

Overall, the global primary market volume has reached USD 74.15 billion in seven months ended July 2014, which is 6.8 percent higher than the USD 69.42 billion volume in same period last year, said the report.

Analyzing by the country of sukuk origination, the primary market activity was heavily concentrated in Malaysia which accounted for 80.6 percent or USD 6.41 billion of the total new issuances in July, noted the report. It added at the same time that the primary sukuk market activity across global markets remained subdued and other obligors' based in five other jurisdictions tapped the market namely Saudi Arabia, Senegal, Indonesia, Bahrain and Gambia.

"All issuers in July issued sukuks denominated in the respective local currencies of their domiciles. The only two exceptions were the multilaterals, the Saudi-based IDB and the Malaysia-based IILM, which issued in US Dollars.

"Based on this, the Malaysian Ringgit accounted for bulk of the issuances, representing 69.8 percent of the total market. The US Dollar was the second major currency accounting for 23.4 percent of the total market share, spearheaded by the IDB and IILM sukuk tranches worth a combined USD 1.86 billion," the report said.

By sector, government issuances accounted for 50.3 percent of total issuances in July, followed by the financial services sector with a 25.7 percent. Power and utilities was the other major sector in July accounting for 13.7 percent of the issuances.

(Kuwait News Agency / 05 August 2014)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com