Arab News, Saturday, Jan 22, 2022 | Jamada Al-Aakhirah 18, 1443
Sukuk issuance to remain flat in 2022, says S&P Global
Saudi Arabia: Sukuk issuance volumes
will not grow significantly in 2022 as global interest rates rise and funding
needs for Gulf economies fall, according to a report from S&P Global Ratings.
Global sukuk issuance fell marginally to about
$147.4 billion from $148.4 billion in 2020, S&P said in the report.
Central bank interest rates tend to respond to
moves from the US Federal Reserve, particularly those in the Gulf where
currencies are pegged to the dollar.
“Amid a tight job market, accelerated inflation
readings over the past few months, and increasingly hawkish forward guidance
from the US Federal Reserve, we now expect three rate hikes in 2022, with the
first expected in May,” the report said.
While sukuk issuance is likely to be subdued this
year, the market is likely to grow in the long run, due to the increasing
importance of environment and governance factors, it added.
Green and sustainability linked sukuk will
continue to attract investors, S&P said. Energy transition policies adopted by
Gulf countries as well as fresh fintech solutions will provide new opportunities
for sukuk issuers.