The global primary sukuk market issuances have cumulatively surpassed the milestone USD100bln in the first ten months of 2014, said a monthly KFH report on Friday.
The pipeline in the last two remaining months of 2014 is robust as the likes of the Government of Pakistan, Government of Tunisia, Dubai and corporate institutions in many countries have plans to tap the sukuk sector within the next few weeks. Overall, 2014 has become the third consecutive year when annual primary market issuances have surpassed the monumental USD100bln mark, said the report.
The fourth quarter of 2014 (4Q14) has begun with a modest performance as October recorded a monthly issuance volume of USD8.27bln; a 36% decline month-on-month (m-o-m) when compared with the USD12.94bln volume issued in September.
Earlier, the volume in September had exceptionally been uplifted by five international sovereign sukuk issued by various economies including Indonesia, Hong Kong, Emirate of Sharjah, South Africa and Luxembourg.
Bn contrast, there were no international sovereign sukuk issued in October and the only exception was a sole 3-month liquidity management sukuk worth USD860mln by the multilateral International Islamic Liquidity Management Corporation (IILM). In the domestic sovereign sukuk market, there was an active participation by regulatory bodies in the jurisdictions of Bahrain, Brunei, Gambia, Indonesia and Malaysia to issue short-term liquidity management sukuk. Collectively, these five jurisdictions issued USD5.47bln worth of short-term sukuk with tenures ranging from 2 months to a year, said the report.
In the longer maturity domestic sovereign sukuk market, the Ministry of Finance in Indonesia and the Central Bank of the Republic of Turkey were the two issuers, collectively raising USD1.66bln. Meanwhile, three sukuk tranches were also issued by two Malaysian government-related entities, Cagamas Behad and Telekom Malaysia, altogether raising almost USD100mln between them. Overall, sovereign and government-related entity issuers accounted for a total of USD7.22bln or 87.4% of the total volume in October.
In the corporate sukuk sector, notably all issuances were by Southeast Asian obligors. Malaysian corporate entities dominated the market issuing 22 tranches worth a collective USD781.2mln. There was a notable absence of corporate issuers from the Gulf Cooperation Council (GCC) and Turkey, presumably on account of various geo-political challenges afflicting the region. Overall, the corporate sukuk issuances accounted for USD1.05bln or 12.6% of the monthly issuance volume in October.
By jurisdictions, obligors' based in seven different markets tapped the primary sukuk market in October. However, the volume was concentrated in three countries, namely: Malaysia, Indonesia and Turkey.