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Sukuk record year

January 15, 2012

USD 85 billion sukuk issued in 2011

By Adnan Halawi, Team Leader – Fixed Income, Zawya

USD85bn of sukuk were sold in 2011, an increase of 62% from 2010, writes Adnan Halawi, Zawya’s Fixed Income Analyst, who presents a sukuk timeline for 2011 and pipeline for 2012.


USD 84.4 billion of sukuk were issued in 2011 across the world, an increase of 62% from the USD 52 billion issued in 2010. This made the year the best on record in terms of sukuk issuance according to data compiled by Zawya’s Sukuk Monitor.

Malaysia continued to constitute the main sukuk market worldwide, followed by the GCC, while sovereign issuers were the main drivers of the growth. The global sukuk market now stands at USD 182 billion.

Source: Zawya Sukuk Monitor

Malaysia issued USD 58 billion or 69% of the total followed by GCC countries which issued a combined total of USD 19 billion or 23% of the total. New countries that witnessed sukuk issuance in 2011 were Yemen, Iran and Jordan.  Bahrain managed to maintain a top ranking among sukuk issuers despite all the unrest witnessed in the kingdom, while the UAE managed to climb the rankings from fifth with USD 1 billion in 2010 to third with USD 4.1 billion. Indonesia was the second biggest of issuer of sukuk in Asia.

Source: Zawya Sukuk Monitor

Government institutions continued to be the main issuers of sukuk across the globe with USD 56 billion or 66% of the total. Financial services followed with USD 15 billion or 17.5%.

Currency breakdown remained in favor of the Malaysian ringgit (MYR), which captured a 66% of the total at USD 65 billion. This was followed by the Qatari riyal (QAR), which received support from the huge domestic sukuk issued in January 2011. The US dollar came in third with USD 8.9 billion or 10% of the total, marking a strong comeback for USD-denominated sukuk.

New currencies included the Yemeni riyal (YER), Iranian riyal (IRR), Jordanian dinar (JOD) and Chinese yuan (CNY). The year witnessed an increased tendency for GCC issuers to issue in the Malaysian market.

While sukuk market remained skewed toward domestic markets with USD 75.8 billion or 89% of the total in 2011, there were 14 international sukuk worth USD 8.6 billion, up from 11 worth USD 5 billion in 2010.

Murabaha, Ijara, BBA and Musharaka remained the most used structures followed by Wakala and Istithmar – except that Wakala became a more widely used structure in 2011.

The London Stock Exchange grabbed the biggest number of listed sukuk issued in 2011 with 10 sukuk worth USD 5.1 billion, followed by Bursa Malaysia with five issues worth USD 3.33 billion.

The top sukuk issued in 2011 in terms of size included the QAR 33 billion (USD 9 billion) Qatar Sovereign Sukuk sold in January in the domestic market; Malaysia’s Wakala Global Sukuk with two tranches worth USD 2 billion; Nakheel Sukuk 4; Indonesia Global Sukuk; and SATORP’s sukuk. The last three were worth USD 1 billion each.

Click here to view our Sukuk Yearly Review for the year 2011

Sukuk timeline

What follows is a timeline of the major events and developments that took place in 2011 and which shaped the sukuk industry, some of which are expected to leave their impact and shape the year 2012 as well.

Jan Qatar Central Bank Issues QAR50 Bln Bonds, Sukuks View
Feb Yemen Launches First Sukuk View
Mar First Sukuk Ijara Issues in Iranian Capital Market View
Al-Rajhi Cement – Jordan Issues the First Islamic Sukuk in Jordan View
Turkish Parliament passes tax neutrality law for Sukuk Al-Ijara View
Apr Bahrain Bourse Lists BD 200 million Government Islamic Leasing Sukuk View
May Thai Government Grants Tax Incentives to Boost Capital Market Development View
Jun First short-term sukuk out of Pakistan View
Introduction Of Bank Negara Monetary Notes-Istithmar View
Egypt EFSA’s BOD approved the Proposal of Rules governing Issuing and Trading in Sukuk View
July Saudi Binladin closes Second Short Term Sukuk View
Aug Nakheel launches Dh4.8b sukuk View
Meezan Bank advised the First Ever Islamic Short-term Sukuk in Pakistan View
Sep SATORP pioneers project sukuk for Jubail refinery View
Oct Goldman’s Sukuk Trust Certificate Program View
TAQA establishes MYR 3.5 billion programme View
Khazanah Issues Inaugural Offshore RMB Denominated Sukuk of RMB500 million View
Nov Bahrain prices $750m 2018 Sukuk View
Thomson Reuters launches World’s First Islamic Interbank rate View
The Republic Indonesia prices US$1 Billion REG S/I44A Sukuk due 2018 View
Three likely flaws in Goldman Sach’s milestone sukuk View
Dec South Africa’s National Treasury Invites Proposals for Sukuk View

Besides the abundant issuance in 2011, there were a number of announcements that have created a healthy pipeline for 2012. While some countries managed to change their tax regulations to facilitate sukuk issuance, others initiated the procedures to do so.

Few companies shelved their issuance plans due to unfavorable market conditions and even fewer defaulted on repaying their obligations in 2011. Despite the Arab Spring and the Eurozone debt crisis, we saw a record year of issuance.

Sukuk 2012 Forecasts:

1-      More countries join the club of issuers
2-      New currencies
3-      More cross-border sukuk
4-      Further innovation in structures
5-      More consolidation
6-      More conventional issuers selling Islamic bonds
7-      More project finance sukuk
8-      More short term sukuk
9-      More debates and controversy
10-   More listing, trading and liquidity
11-   More diversification

Source: Zawya Sukuk Monitor

Related Content:

USD 63 bn sukuk issued in first 9 months of 2011
Global Sukuk: Shorter And Wider
Slash Taxes, Spur Sukuk
GCC sukuk roar back
$13.9bn GCC Sukuk maturing by 2012
Sukuk gain where bonds lose in a month of firsts
Sukuk Mondiale
The Rise of Wakala

For more information, please contact the writer:
Adnan Halawi
Team Leader – Fixed Income

© Zawya 2012

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