KFH-Research: $131bn total issuance of Sukuk in 2012

The report stated that Malaysia and the ringgit continue to dominate the market of sovereign Sukuk issuance, where governmental and soverign issuances were more by 70% in December ($5.7bn). The top countries in Sukuk issuance are as follows: Malaysia, Saudi Arabia, UAE, and Indonesia. One of the issuance was made by Saudi French Bank worth $506m; in addition to the Sukuk of FWU Group, which is the largest European issuance for Islamic Sukuk at all for companies, and is the first Sukuk issuance made by a German company for $55m.

Sukuk issuances continued at decent levels in December as we close off another tremendous year for the Islamic capital markets. A total of $8.1bn was issued during the month, 61.7% higher than the same period of 2011. This means total issuances for 2012 round up to $131.2bn representing a y-o-y increase of 54.2%.

Malaysia dominated the month in terms of amount issued, accounting for a 90.2% market share, while there were a distinct absence of sukuk from Indonesia and the UAE. Malaysia was domicile to 74.0% of all primary market issuances in 2012, followed by Saudi Arabia (8.0%), the UAE (4.7%) and Indonesia (4.6%). Governments remained the largest issuer type, representing 70.1% during December while there were a number of significant issuances also issued in the financial services sector. Both sectors have represented 61.8% an11.4% of the primary market respectively in 2012 while the transport sector represents 13.0%.

Notable issuances during the month include the SAR1.9bn ($506.6m) sukuk issued by Banque Saudi Fransi and structured using Murabahah and Mudharabah principles. The sukuk has a seven year tenure that pays 3 months SIBOR + 110bps on a quarterly basis. Similarly, FWU Group issued the first sukuk by a German corporate and the largest sukuk from a European corporate, worth $55.0m.

Sovereign issuers made up 70.1% of the primary market in December while government related entities accounted for 6.8% and corporates took the remaining 23.2%. Malaysian ringgit accounted for 91.8% of issuances during the month as compared to 74.0% over the year.

A total of 55 sukuk were issued in December vs. 55 sukuk in November and 72 in October. Among these, 31 were issued by the corporate sector totalling $1.9bn (November: $2.7bn, -29.6%), 19 by sovereigns totalling $5.7bn (November: $5.7bn, +0.0%) and 5 by government related entities worth $548.8m (November: $1.1bn, -50.1%).