KUALA
LUMPUR: Sukuk issuance in the Malaysian market is expected to see steady growth
of around 10 per cent during 2014 to 2015, says Moody’s Investors Service.
Its Asean
corporate finance group managing director, Philipp Lotter, said this was in
line with Moody’s positive view on the long-term growth trends in the global
sukuk market.
“Given
the deep local capital markets and strong support from the government, Malaysia
will remain the world’s largest sukuk market for the foreseeable future
although regional and global competition will develop over the next two to
three years,” Lotter said in a statement yesterday.
He said
some two-thirds of the approximately US$290 billion outstanding sukuk was
issued in Malaysia.
“We
expect the remaining one-third to stay fragmented because a growing number of
new and emerging sukuk issuance markets, such as Indonesia, Singapore and Hong
Kong are tapping into this fast-growing asset class although Saudi Arabia is
showing strong domestic potential,” he added.
Moody’s
analysis is contained in its just-released report titled “Malaysian Sukuk
Market: Issuance To Show Steady Growth To 2015.” The report said growth in
Malaysia’s sukuk market would be driven by few key factors such as sovereign
and related issuers.
Private
sector corporates seeking to raise the necessary funding to execute the
government’s investment blueprint aimed at attracting US$444 billion in
investments from 2010-2020 under the country’s economic transformation
programme would also drive sukuk issuance.
The
report pointed out that international issuances in Malaysia accounted for less
than 10 per cent of the US$178 billion in total outstanding sukuk.
Moody’s
expected issuance volume to remain dominated by local-currency transactions in
the near future with the increase in international foreign-currency sukuk
issuances in the Gulf region.
However,
it said the larger more creditworthy issuers in Malaysia would look to
diversify their funding and tap the global markets in 2014-2015.
The
report further indicated that over the last decade, the increasing acceptance
and popularity of sukuk among domestic investors in Malaysia had resulted in a
substantial growth in issuance volume.
Annual
issuance of Malaysian sukuk grew at a compounded annual growth rate of 22 per
cent to US$33 billion in 2013 from US$3 billion in 2001
(Borneo Post Online / 06 June 2014)
---Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com
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