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Global Sukuk market down by 31.4 per cent in July, reports Kuwait Finance House

August 6, 2014

Global primary Sukuk issuances amounted to $7.95 billion in July compared to the $11.6 billion in June, down 31.4 per cent, according to a report by Kuwait Finance House (KFH). By sector, government issuances accounted for 50.3 per cent of total issuances, followed by the financial services sector with a 25.7 per cent. Power and utilities was the other major sector in July accounting for 13.7 per cent of issuance.

KFH noted that with the Holy Month of Ramadan falling in July the Sukuk market was subdued with only a few corporate Sukuk issued in Malaysia and one in Indonesia. The report noted corporate Sukuk volume for July of $1.1 billion, less than 15 per cent of the new issues market for the month, against 45.3 per cent or $5.24 billion in June.

For KFH, the highlight of the month in the Sukuk market was the debut issue from the Government of Senegal, which priced its maiden sovereign XOF 100 billion ($200.5 million) Sukuk on 18 July. Overall, global primary market volume reached $74.15 billion in seven months ended July 2014, up 6.8 per cent on year-ago levels.

Primary market activity was heavily concentrated in Malaysia which accounted for 80.6 per cent or $6.41 billion of total new issuances in July. KFH added that other obligors based in five other jurisdictions tapped the market during the month, namely Saudi Arabia, Senegal, Indonesia, Bahrain and Gambia.

"All issuers in July issued Sukuk denominated in the respective local currencies of their domiciles. The only two exceptions were the multilaterals, the Saudi-based IDB and the Malaysia-based IILM, which issued in US Dollars.

"Based on this, the Malaysian Ringgit accounted for bulk of the issuances, representing 69.8 per cent of the total market. The US Dollar was the second major currency accounting for 23.4 per cent of the total market share, spearheaded by the IDB and IILM sukuk tranches worth a combined $1.86 billion," the report said.

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Source: CPI Financial

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