The Sukuk market remains a collection of regional/ local markets. International issuances represented only 16 per cent of total issuances in 2013 of which few originated outside the biggest Sukuk markets of
When entities domiciled outside these countries have issued Sukuk, around 60 per cent of the investors have been from the
Sukuk are usually issued at a premium compared with conventional bonds, but higher standardisation and liquidity may cause yields to align.
In a report released in April,
Over the past 10 years, local Sukuk issuance in
However, interest from issuers outside these traditional markets has increased, chiefly because Shari'ah compliance attracts deep-pocketed Middle Eastern and Asian investors. We understand that about half of Sukuk investors, invest in such instruments for religious reasons. We also estimate that about 60 per cent of investors in Sukuk issued by entities domiciled outside the GCC and
The structured nature and lower liquidity of Sukuk means that they are generally priced with a premium compared with conventional bonds, so attracting these investors comes at a cost. In future, we expect this premium to reduce as Sukuk documentation becomes more standardised and liquidity stronger.
*Under Standard & Poor's policies, only a Rating Committee can determine a Credit Rating Action (including a Credit Rating change, affirmation or withdrawal, Rating Outlook change, or CreditWatch action). This commentary and its subject matter have not been the subject of Rating Committee action and should not be interpreted as a change to, or affirmation of, a Credit Rating or Rating Outlook.
We understand that about half of Sukuk investors, invest in such instruments for religious reasons
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