While maintaining its $160 billion–$170 billion global sukuk issuance forecast for 2024, S&P Global Ratings stated that adopting the new Sharia Standard 62 could potentially upend the sukuk market as early as next year.
S&P analysts believe that if the Accounting and Auditing Organisation for Islamic Financial Institutions’ Sharia Standard 62 significantly changes the nature and risk characteristics of sukuk instruments, it will lower issuance volumes in the medium run.
According to Mohamed Damak, global head of Islamic finance at S&P Global Ratings, the standard will move the industry towards asset-backed sukuk by mandating the actual transfer of underlying assets to investors.
At the halfway point of 2024, the total amount of sukuk issued was $91.9 billion, comparable to the previous year but with a notable increase in issuances denominated in foreign currencies.
According to Damak, we continue to project a global sukuk issuance of $160 billion to $170 billion in 2024, including $45 billion to $50 billion in issuance denominated in foreign currencies.
Over the first half of this year, issuance totaled $91.9 billion, a slight increase over $91.3 billion in the same period last year. However, there has been a noticeable shift: by June 30, 2024, foreign currency issuances had increased by 23.8% to $32.7 billion from $26.4 billion the previous year.
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