THOMSON REUTERS SUKUK PERECPTIONS & FORECAST 2015 Growing the Global Footprint of Sukuk Tapping New Sovereign & Corporate Opportunities In The Islamic Capital Markets
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THOMSON REUTERSSUKUK PERECPTIONS & FORECAST 2015
Growing the Global Footprint of SukukTapping New Sovereign & Corporate Opportunities In The Islamic Capital Markets
MARKET OVERVIEWWhat has been happening in the global Market up to Q3, 2014?
$0.72 $1.02 $0.21 $0.97 $2.57 $3.33 $5.36 $4.98$11.27
$20.43
$37.63
$20.99
$34.30
$51.24
$84.40
$137.14
$116.93
$99.27
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1996 1997 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 YTDQ3,
2014
Number of Sukuk $ Billion
Global Aggregate Sukuk Historical Trend (1996-Q3 2014)
Amount Sukuk Issued Number of Sukuk
2014 Global Sukuk Market bounces back from 2013 low with almost $100 billion sukuk issued in the first nine months
Source: Thomson Reuters Zawya
2014, market mix is expanding to include more non-OIC countries from both Sovereigns and Corporates
19 jurisdictions tapped the sukuk market in 2014 with UK, Hong Kong, Luxembourg, Senegal and South Africa newcomers…
The Malaysian Ringgit continues to dominate the sukuk market with GCC currencies rising and European currencies entering the market
Up to Q3, 2014, total sovereign sukuk issuance was $63.05 billion compared to $13.61 billion quasi-sovereign and $22.60 billion corporate issues…
Financial institutions continued to lead all corporate issuances, followed by power and utilities, construction, real estate & transport …
Of the 224 murabahah issuances, only 2 were issued outside Malaysia….
On the other hand, the market is moving cautiously in terms of adopting new structures…
Based on survey findings investors & lead arrangers are moving towards mid-term sukuk..which may affect the demand for longer term sukuk
Market outlook
MARKET OUTLOOK Supply & Demand Model Assumptions
7%
19%
22%
25%
27%
0% 5% 10% 15% 20% 25% 30%
Rare Paper/issuer
Reasonable credit risk
Mandate to only invest in Islamic instruments
Diversification
Attractive Yield
What are your reasons for investing in sukuk?
BUY SIDE
3%
8%
20%
33%
38%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Restructure debt
Cheaper funding and better pricing
Refinance debt
Diversify source of funding
Business Expansion
What is your primary reason to issue sukuk?
SELL SIDE
On the supply side, conventional issuers are attracted by the high demand for sukuk while higher yield attracts non-Shariah-sensitive investors
Expectation for full year 2014 can be attributed to the strong pipeline for Q3/Q4 2014 and early 2015 from both sovereigns and blue chip corporates.
2014
2015
On the demand side, according to IFDI 2014, total global Islamic Finance assets in 2013 reached $1.658 trillion covering a universe of 92 countries
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sukuk Demand & Supply Levels (2014 – 2020)
Total Global Sukuk Matured Total Global Sukuk Issued Total Outstanding Global Sukuk (Previous Year)
Total Outstanding Global Sukuk Total Sukuk Demand
Supply & Demand Gap: Despite the postive come back forsukuk in 2014 it is still below 2012 levels. Supply & DemandGap has increased to reach $236 in 2014 due to lowerexpected issuance driven by economies recovery , higherinterest rates and feds bonds repurchase However, it isexpected to drop in 2018 onwards due to steady marketissuance
2020: Easy road for sukuk with issuance surpassing $200 billion and demand reaching almost a trillion
Thank youAny Questions
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