Rating agency Moody’s has forecast a 5% decline in global sukuk issuance this year due to the Covid 19 pandemic.
However, GCC countries are likely to lead a rally in the second half of the year, states the report from Moody’s Investor Services.
The sukuk market has seen four years of continuous growth but the first half of 2020 has seen issuance drop to $77 billion, 12% short of the total in 2019, a year which saw record issuance levels.
But while issuance dropped by 25% throughout Southeast Asia, volumes actually rose in the Middle East by 7%. And Moody’s expects the financing needs of GCC sovereigns to lead a recovery in the second half of 2020.
"The decline will be partly limited by the financing needs of GCC countries because of lower oil prices and the pandemic," said Nitish Bhojnagarwala, vice president and senior credit officer at Moody's.
"We expect issuance will rally in the second half of the year to around $90 billion, led by sovereigns in the Gulf."
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