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Tue 10 Nov 2009 04:30 PM

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Moody's sees 50% surge in sukuk issuance this year

Credit rating agency says Islamic bond issuance rose 40% in first 10 months of 2009.

Global sukuk issuance may rise by 50 percent this year, Moody’s said on Tuesday.

Islamic bond issuance rose 40 percent in the first ten months of the year after falling 55 percent in 2008, the credit rating agency said in a report.

New sukuk issuance in the private sector has declined amid the economic slowdowns and sovereigns and government-related entities have become the major sukuk issuers on the back of increased public spending.

"The recent surge in sovereign or government-backed issuance - amid continued uncertainty over the timing and magnitude of the economic recovery - is a long-awaited development that should help create a more efficient and soundly based sukuk market,” said Faisal Hijazi, business development manager of rating services and Islamic finance.

It should also help the market develop a more detailed yield curve, which should result in fairer and more transparent pricing, he said.

Growth in the number of sukuk funds, targeting long term investors like pension funds, will eventually help create a secondary market for sukuk, Moody’s said.

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