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US Federal rate cut boosts sukuk issuance

10/9/2024

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Issuance activity in the Islamic bonds market has inched up recently, driven by the US Federal Reserve’s latest policy shift, according to a new analysis.

At the end of the third quarter of the year, global sukuk stood at $900 billion, posting an 8.5% growth compared to a year earlier, Fitch said.

The Fed cut its benchmark interest rate for the first time in four years by 0.50 percentage points. The move has had a positive impact on financing conditions, the ratings agency said.

“Global sukuk issuances are rising following the US Fed’s rate cut… with financing conditions improving,” the report said.

“We are seeing a build-up of the sukuk pipeline partially supported by the recent Fed cut,” noted Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings.

Al Natoor added that the majority of the bond-like instruments the agency has rated (81.5%) are investment-grade, while nearly all issuers (95%) have stable outlooks and have likewise not defaulted, indicating that the credit conditions in the market have improved.

The agency, however, pointed out that there are still drawbacks that could negatively impact the market, including “sharia-related complexities”, as well as heightened geopolitical tensions and crude market volatilities.

A major player in the sukuk market, the Gulf Cooperation Council (GCC) region saw bonds and sukuk primary issuances hitting $75.5 billion in the first half of the year, rising by 38% over a year earlier, according to a separate report by Markaz. The funds were raised through 173 sovereign and corporate issuances.

​​Zawya

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  • Home
  • News
  • The Islamic law
    • Socio-economic Justice
    • The ownership of wealth
    • Prohibition of Riba, Maysir and Gharar
    • Zakah
  • Islamic Economics
    • Shareholding in Islam
    • Loans and debts in the Sharia'h
    • The Islamic Development Bank
  • Islamic Finance
    • Financial intermediation
    • Islamic accounting
    • Financial statements analysis
    • Regulation and Supervision
      • Shari’ah Boards
      • Operations within the conventional system
    • Islamic Commercial contracts
      • Relationship with central banks
      • Valid transactions
      • Mudarabah
      • Musharakah
      • Diminishing Musharakah
      • Murabahah
      • Salam
      • Istisna'a
      • Ijarah
      • Wakalah
      • Other contracts
  • Islamic Banking Operations
    • Starting an Islamic Bank
    • Commercial transactions
    • Deposits
    • Islamic credit cards
    • Fee-based services
    • Letter of Credit
    • Bank Guarantee
    • Modes of financing and investment
      • Ijarah financing
      • Musharakah and Mudarabah certificates
      • Diminishing Musharakah
      • Replacing interest-based lending
    • Capital Market Operations
      • Islamic Unit Trusts
      • Islamic Fund Structures
      • Investment screening
      • Islamic Market Indexes
      • Islamic ETF
      • Venture Capital
      • Foreign exchange
  • Sukuk
    • Sukuk structures
    • Controversy
    • Indexation of financial obligations
    • Risks underlying Sukuk
  • Takaful
    • Takaful Agreements
    • Takaful models
    • Areas of Takaful
    • General insurance
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