The sukuk market in 2011 will be driven by the recovery made in global economic activity, flexible monetary policies, and sovereign fund-raising efforts to support economic growth as well as the revival of private sector projects, said a report.
A major report by Kuwait Finance House into the Sharia-compliant bond market further predicts the entry of new players in the emerging markets, as well as new non-Islamic exporters willing to take advantage of the sukuk market with potential debut in Thailand, Japan and Europe, which will boost demand for sukuk.
The sukuk industry has emerged as one of the main components of the Islamic financial system and has increasingly become an integral subset of the international financial system, according to the report.
Over the years, the sukuk market has grown by 10 per cent to 15 per cent annually to reach approximately $100 billion and contributed to 12 per cent of the global Islamic finance assets in 2009, according to the report.
Prospects for the sukuk market remain bright. In 2009, global sukuk issuances surged by 58.8 per cent year-on-year to $24.7 billion compared to the $15.5 billion raised in 2008. In the first nine months of 2010, total sukuk issued globally increased further to $27.9 billion, 62.3 per cent higher than the $17.2 billion raised in the first nine months of 2009 and surpassing the 2009 full year issuance of $24.7 billion, the report added.
This was in line with a gradual global economic recovery and improved market condition and investor sentiment, the report said.
By issuer type, approximately 77.3 per cent of fundraisers were sovereign and quasi-sovereign entities, in line with the general interest of investors which saw a shift in preference to safe-havens and high quality issues, the report added.