Sukuk ups the ante in 2012

The issuance of Islamic Bonds which is also known as sukuk was reported to have increased to USD 137 billion in 2012 as compared to USD 92.4 billion in the previous year according to a new report by the International Islamic Financial Market (IIFM).

Ijlal Ahmed Alvi, Chief Executive Officer of IIFM stated that the last two years were record years of sukuk issuances which reached $92.4 billion and $137 billion in 2011 and 2012, respectively.

This year has also started on a positive note and as per the report over $11billionn worth of sukuk was issued in January 2013 and the growth trend is expected to continue in coming years.

Alvi noted that an interesting trend or innovation in sukuk issuances also highlighted by this report is Sukuk issuance in non-local currency such as an issuer based in UAE issuing a Sukuk in Malaysian Ringgit and an issuer based in Malaysia issuing a Sukuk in Chinese yuan and others.

This is another positive development and will certainly further contribute in the development of the sukuk market.

He also said that the risk arising from currency or rate of return mismatches can be managed by Islamic hedging documentation and product standards being published by IIFM and ISDA and will provide further confidence to investors in sukuk.

With the growth in issuance, there have been signs of growth in the secondary market.

He predicted that this was a trend likely to continue in the years ahead.

The report also highlights the different sukuk structures used by international issuers as well as sukuk structures used at domestic level by various jurisdictions active in issuing them.

The report also contains selected sukuk case studies in the international sukuk market, providing deeper understanding of the mechanism and uniqueness of the most popular commonly used fixed profile instruments in the Islamic capital and money market.

Leave a Reply