Moody’s: Islamic finance to continue rising in 2021 and beyond

Moody’s Investors Service expects global sukuk issuance will stabilize this year to around $190 billion-US$200 billion (RM768 billion-RM808 billion) following record issuance of nearly $205 billion in 2020, Report informs.

Its vice president and senior analyst Ashraf Madani said the Gulf Cooperation Council (GCC) sovereigns would increasingly turn to sukuk issuance given high financing needs due to moderate oil prices and wide fiscal deficits.

“Corporate issuance, however, will remain limited because of more attractive conventional market opportunities, while new financial institutions will boost sukuk issuance in the sector,” he said in a newly published report.

Ashraf said Islamic banking, sukuk, and takaful would benefit from supportive government policies in many countries and strong demand for Shariah-compliant products despite pandemic challenges.

“We expect Islamic finance to continue rising in 2021 and beyond, maintaining its now long-established growth trend.

“The industry generally remains underrepresented in countries with large Muslim populations, providing ample room to expand,” he said.
Ashraf said penetration in the core Islamic financial markets of the GCC, Malaysia (A3 stable), Indonesia (Baa2 stable), and Turkey (B2 negative) rose to 32.8 percent in September 2020, from 31.4 percent in 2019 and 25.5 percent in 2013.