‘Sovereign stimulus packages fuelled global issuance last year’

KUALA LUMPUR: Malaysia continued to dominate the sukuk market as global issuances rose nearly 17 per cent last year despite the impact of the Covid-19 pandemic on the global economy and economic sentiment.

Global sukuk issuance increased 16.8 per cent to US$152.6 billion last year from US$130.6 billion in 2019, with the top markets being Malaysia with a 39.2 per cent market share, Saudi Arabia

(20.4 per cent) and Indonesia (17.5 per cent), said RAM Rating Services Bhd (RAM Ratings) in a statement yesterday.

“The contagion impact of the pandemic saw steady issuances from sovereigns last year to finance stimulus packages in support of the pandemic-ravaged economies.”

RAM Ratings said supportive monetary policies and strong government spending were key in boosting local economies.

As a result, sovereign issuances increased 9.2 per cent year-onyear to US$87.5 billion last year from US$80.1 billion in 2019.

“The three sovereign heavyweights — Indonesia with its 29.9 per cent market share (US$26.2 billion), Malaysia with 28.2 per cent (US$24.6 billion) and Saudi Arabia with 20.7 per cent (US$18.1 billion) — accounted for more than two-thirds of the global sovereign issuance last year.”

RAM Ratings said the corporate sector combined with quasi-government issuance posted a 28.8 per cent increase year-on-year to US$65.1 billion last year, with Malaysian corporate sukuk issuance making up 53.9 per cent, or US$35.1 billion, of the total.

Saudi Arabia’s sukuk market has also seen a steady rise in issuances in recent years, with its corporate sector growing 39.8 per cent to US$13.0 billion last year from US$9.3 billion in 2019.

The financial services sector was the common denominator in these core markets, said RAM Ratings.

These markets also supported local currency sukuk with ringgit-denominated sukuk contributing 36.5 per cent to total global issuance, followed by rupiah (15.8 per cent) and Saudi riyal (14.4 per cent).