Global sukuk issuance to touch $145b in 2015

The main reasons for more sukuk issuance this year include the growth of the Islamic finance industry and an increasing demand for Shariah-compliant bonds, the panel said.

Michael Bennett (centre) and other experts discussing the demand for sukuk at a panel event in London. — Supplied photo

Abu Dhabi — The global issuance of Islamic debt instruments will reach $145 billion in 2015, estimates an expert panel.

A panel, attending a seminar organised by National Bank of Abu Dhabi (NBAD) in London, agreed that the demand for sukuk significantly outweighs supply, with growing investor appetite for more diverse investment opportunities.

The main reasons for more sukuk issuance this year include the growth of the Islamic finance industry and an increasing demand for Shariah-compliant bonds, the panel said.

The panel comprised Michael Bennett, head of derivatives and structured finance at The World Bank; Gordon Welsh, head of aviation at UK Export Finance; Dr Massoud Janekeh, director and head of Islamic capital markets at Bank of London and The Middle East; and Mushtak Parker, editor of Islamic Banker. Andy Cairns, managing director and global head of debt origination and distribution at NBAD, moderated the session.

Cairns said: “2014 was a record year for international sukuk issuance. I am optimistic that this momentum will continue in 2015, supported by first-time issuers and further product innovation. Given the significant liquidity among Islamic investors and across the Middle East, I see sukuk as a funding tool that is increasingly relevant to global borrowers.”

During the event, which was attended by over 70 industry professionals, the panelists highlighted the importance of innovation and a greater diversity of issuers in order to satisfy demand. The debate centred on the potential for sukuk to become a major financing tool and mainstream asset class.

The panelists acknowledged that much has been done in recent years to standardise the sukuk structuring process and make it more efficient, but they agreed that Western institutions need to work closer with shariah boards to encourage more traditionally conventional issuers to tap the Islamic market.

Alex Thursby, NBAD’s group CEO, said: “As one of the world’s leading sukuk arrangers, we believe there is a significant opportunity for multinationals to raise capital by issuing shariah-compliant instruments.”

Sukuk provides an alternative to a conventional bond and offers a wide access to liquid assets, he said. “Our role is to nurture the growth of the Islamic finance industry and drive economic activities and growth across the West-East corridor,” Thursby said.

The panel, ‘The Future of Sukuk; West East Corridor’, was convened in response to the heightened interest in sukuk over the past year, which has intensified following the recent successful sovereign issuances by a number of non-Islamic countries, including the UK, South Africa and Luxembourg.

— haseeb@khaleejtimes.com