Malaysia moves into pole position as sovereign sukuk issuer in 1Q 2021

Published on 16 Jun 2021.

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Despite the economic challenges wrought by the COVID-19 pandemic, the global sukuk market recorded a 21.2% y-o-y increase in issuance to USD42.3 bil in 1Q 2021 (1Q 2020: USD34.9 bil). Malaysia led this global issuance with a 42.4% market share (USD17.9 bil), followed by Saudi Arabia (30.6% or USD12.9 bil), Indonesia (16.5% or USD7.0 bil)), Turkey (5.4% or USD2.2 bil) and Kuwait (2.8% or USD1.2 bil). Cumulatively, these five countries’ sukuk issuance took up the lion’s share of 97.7% of global sukuk issuance. The above are amongst the key findings outlined in RAM Ratings’ latest Sukuk Snapshot 1Q2021 commentary.

Sovereigns continued to drive the sukuk market in 1Q 2021, accounting for 60.7% (USD25.7 bil) of overall global sukuk issuance. Corporate and quasi-government issuance made up the other 39.3% (USD16.6 bil). The key markets of Malaysia (+39.8% y-o-y) and Indonesia (+89.2%) charted impressive advancement in sukuk issuance. 

At the same time, the environmental, social and governance (ESG) segment made further inroads, with Malaysia making its debut through the world’s first sovereign sustainability sukuk. On 28 April 2021, the country issued its USD800 million 10-year sustainability trust certificates and a USD500 million 30-year tranche. This maiden sukuk via a special-purpose vehicle — Malaysia Wakala Sukuk — is in line with the Government of Malaysia’s recently launched Sustainability Development Goals Sukuk Framework. 

“The common philosophies between ESG-related instruments and Islamic finance will continue to serve as a bridge for sukuk in becoming a mainstream source of financing,” highlights Siew Suet Ming, technical director of RAM Ratings. The Indonesian government is the world’s most prolific issuer of green sukuk to date, having gone to the market with four green sukuk issues, with a cumulative issuance value of USD2.8 bil as at end-2020.

By contrast, the GCC region posted a 12.7% decline in sukuk issuance to USD14.4 bil in 1Q 2021 (1Q 2020: USD16.5 bil), as more issuers in the region had shifted to conventional bonds. Nonetheless, the 13.6% rise in sovereign issuance to USD9.2 bil (1Q 2020: USD8.1 bil) could not compensate for the 37.3% plunge in corporate and quasi-government issuance to USD5.2 bil (1Q 2020: USD8.3 bil). Listed as the world’s largest sustainability and ESG sukuk to date, Islamic Development Bank’s inaugural USD5.2 bil sukuk programme was the sole issue from GCC’s corporate and quasi-government sector. 

Outlook for sovereign sukuk issuance in the GCC region will chiefly be determined by oil prices, with the uncertainty over the containment of the coronavirus pandemic and the progress of global vaccination programmes influencing demand for crude oil. These factors are likely to shape the GCC’s fiscal policies and the contingent impact on near-term government expenditure. 

RAM’s Sukuk Snapshot is designed as a quick reference point for sukuk data and trends. This publication aims to serve the needs of market practitioners, enabling them to monitor global and Malaysian sukuk market developments. Subscribers can retrieve the Sukuk Snapshot via our website, www.ram.com.my. Non-subscribers may purchase the report at RM500 per copy. 


Analytical contact
Siew Suet Ming
(603) 3385 2585

Media contact
Padthma Subbiah
(603) 3385 2577

Publication Sales
AIN Sulaiman/Faiez Zulkifli
(603) 3385 2596/2597


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Sukuk Snapshot 1Q2021 16-Jun-2021 Sukuk Snapshot View PDF