Malaysia continues to be the world’s largest sukuk issuer

PETALING JAYA: Malaysia continues to be the world’s largest sukuk issuer in 2018, accounting for 38.7% of global sukuk issuance for the first half of the year.

In its First Half of 2018 Sukuk Review report, RAM Ratings said the country’s sukuk issuance had risen to US$19.4bil as at end-June, in contrast to the US$18.6bil recorded a year earlier.

The higher sukuk issuance was largely underpinned by the continued support from the private sector.

However, the total global sukuk issuance had fallen by 5.2% yearon-year to US$50.3bil as at June 30, primarily due to the decline in sukuk issuance from Qatar (-63.6%), Saudi Arabia (-37.9%) and Turkey (-18%).

“Not surprisingly, the bulk of Malaysia’s sukuk issuance came from the corporate sector with a representation of 72%, while sovereign Islamic securities made up 28%.

“According to RAM’s outlook on the bond market in 2018, the gross issuance of government securities remained unchanged at RM100bil to RM110bil, while the gross issu- ance by the quasi-government and corporate sector increased from the previous year’s estimate of RM75bil to RM85bil to RM90bil to RM100bil,” said the ratings agency.

RAM Ratings also said Malaysia’s sukuk issuance could be adversely affected going forward, in the event of any postponement or withdrawal of government projects.

Prior to this, public infrastruc- ture-led projects had contributed significantly to past sukuk issues such as the issuances by DanaInfra Nasional Bhd.

Considering the new government’s earlier manifesto to rationalise public expenditure by reviewing at least RM10bil of identified highpriced projects, RAM Ratings believes that the sukuk pipeline could take a hit.