Kuala Lumpur: Sukuk (Islamic bond) is going to witness another record year as sukuk has registered a remarkable growth in the first half of 2012 as the sukuk issuance worldwide has increased by 36 percent as compared to the same period last year.
Sukuk market continues to grow rapidly across the globe in the first six months of this year. According to the statistics, at least $68 billion worth of sukuk was issued during the first half of 2012, an increase of 36 percent on the same period in 2011.
In the gulf region, Saudi Arabia has stolen the show with a benchmark sovereign sukuk, whereas Malaysia sustained its dominance in the sukuk industry over other countries worldwide.
The current rapid progress by sukuk worldwide indicates that at least $100 billion of sukuk will be sold by the end of 2012 which will make it a record year.
Malaysia issued more than 70 percent of global sukuk in the first six months of 2012 which is no surprise as the country is the global hub of Islamic finance sector and it leads other countries as well.
Saudi Arabia is a surprising package as it has grabbed the second position after Malaysia by issuing 13 percent of global sukuk overpowering the United Arab Emirates. The kingdom made a record issuance of sukuk for the first time and tops all the Gulf Cooperation Council (GCC) countries.
The figures show that issuance of sukuk was exceptionally high in June, probably due to the approach of the summer holidays and the holy month of Ramadan.
Malaysia continued to dominate with generous issues to fund infrastructure development. After the huge issues from Projek Lebuhraya Utara-SelatanBerhad (PLUS) in January and besides the regular issues from Bank Negara Malaysia, Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) closed a MYR3.5 billion sukuk program in the domestic market.
Malaysia sold tranches under an innovative Wakala MYR3 billion program at the end of June, issued by Johor Corporation, a state investment firm. Khazanah Nasional came back to the market with a successful issue of a seven-year benchmark exchangeable sukuk of $357.8 million via Pulai Capital. The offer received an overwhelming demand from investors underlining the market's strong confidence in Khazanah's credit-worthiness.
According to the data, the Gulf region witnessed the sale of $13.7 billion of sukuk in the first half of 2012 with a significant comeback for neighboring Yemen to the sukuk market.
From the UAE, Emirates Islamic Bank, the Shariah-compliant sister of Emirates NBD, sold a $500 million third tranche of its $1 billion program, which came on the heels of a previous similar issue in January. The UAE, through its corporate and sovereign issuers, sold $4.3 billion of sukuk.
Saudi Arabia secured top ranking in the GCC with $8.8 billion sukuk sale. The General Authority of Civil Aviation's (GACA) $4 billion sukuk was the first sovereign to come from the kingdom, followed by Tasnee's first privately placed Islamic bond. Saudi banks increasingly sold sukuk through Saudi British Bank followed by Saudi Fransi marketing a benchmark sukuk in the international markets.
Qatar hired banks to advise on the announced sovereign sukuk issue. The governments of South Africa and Turkey, usually conventional borrowers, will tap the market in the coming months. Malaysia is expected to issue up to MYR2 billion via First Resources and a quasi-sovereign MYR8 billion program through Dana Infra Nasional.