Sukuk issuance in 2012 soars 54 per cent

Total Sukuk issuance in December reached $8 billion with a 61 per cent increase compared to last year.

The report stated that Malaysia and the ringgit continue to dominate the market of sovereign Sukuk issuance, where governmental and sovereign issuances were more by 70 per cent in December ($5.7 billion). The top countries in Sukuk issuance are as follows: Malaysia, Saudi Arabia, UAE, and Indonesia. One of the issuance was made by Saudi French Bank worth $506 million; in addition to the Sukuk of FWU Group, which is the largest European issuance for Islamic Sukuk at all for companies, and is the first Sukuk issuance made by a German company for $55 million.

Sukuk issuances continued at decent levels in December as we close off another tremendous year for the Islamic capital markets. A total of USD8.1bln was issued during the month, 61.7 per cent higher than the same period of 2011. This means total issuances for 2012 round up to $131.2 billion representing a y-o-y increase of 54.2 per cent.

Malaysia dominated the month in terms of amount issued, accounting for a 90.2 per cent market share, while there were a distinct absence of Sukuk from Indonesia and the UAE. Malaysia was domicile to 74.0 per cent of all primary market issuances in 2012, followed by Saudi Arabia (8.0 per cent), the UAE (4.7 per cent) and Indonesia (4.6 per cent). Governments remained the largest issuer type, representing 70.1 per cent during December while there were a number of significant issuances also issued in the financial services sector. Both sectors have represented 61.8 per cent an 11.4 per cent of the primary market respectively in 2012 while the transport sector represents 13 per cent.

Notable issuances during the month include the SAR1.9bln (USD506.6mln) Sukuk issued by Banque Saudi Fransi and structured using Murabahah and Mudharabah principles. The Sukuk has a seven year tenure that pays three months SIBOR + 110bps on a quarterly basis. Similarly, FWU Group issued the first Sukuk by a German corporate and the largest Sukuk from a European corporate, worth $55 million.

Sovereign issuers made up 70.1 per cent of the primary market in December while government related entities accounted for 6.8 per cent and corporates took the remaining 23.2 per cent. Malaysian ringgit accounted for 91.8 per cent of issuances during the month as compared to 74.0 per cent over the year.

A total of 55 Sukuk were issued in December vs. 55 Sukuk in November and 72 in October. Among these, 31 were issued by the corporate sector totalling $1.9 billion (November: $2.7bln, -29.6 per cent), 19 by sovereigns totalling $5.7 billion (November: $5.7 billion, +0.0 per cent) and five by government related entities worth $548.8 million (November: $1.1 billion, -50.1 per cent).

(C.P.I. Financial / 15 Jan 2013)

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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com