Sukuk defaults are rare, but the revised criteria could help address market uncertainty about the contractual obligations of the various parties. Such uncertainty can affect sukuk pricings, particularly for issuers with ratings below investment grade.
For situations in which a sponsor is performing on its own obligations while sukuk payments by an SPV are not full or timely, S&P said such temporary deferrals would not be classified as defaults as long as the agency expected payment within one year.
S&P predicted global sukuk issuance would exceed $100billion this year, after reaching $116.4 billion in 2014 and$111.3 billion in 2013, supported by still-positive economic outlooks in the Gulf region and Malaysia.
The market will benefit from new sovereign issuers and the implementation of Basel III global banking standards, which are encouraging banks to boost their capital, S&P said. But it warned that episodes of turbulence could cause issuance volumes to fall this year.
"The first will likely come from the current trend in oil prices, which have dropped precipitously over the past few months," the agency said in a research note.
"The second episode of turbulence may come from the expected increase in U.S. Fed interest rates, which is likely to reduce global liquidity."