The global sukuk market declined marginally by 3.2% y-o-y to USD41.0 bil in 1Q 2022 (1Q 2021: USD42.3 bil), primarily led by a drop in Malaysian (-23.5% y-o-y) and Indonesian (-18.8% y-o-y) sukuk issuances. However, there was an increased presence from smaller core market issuances such as Turkey, which saw a 134.8% y-o-y increase in sukuk issuances to USD5.4 bil (1Q 2021: USD2.3 bil), helping to moderate the overall decline. In that market, there was a notable USD3.0 bil Sukuk Al Ijarah issued by the Turkish sovereign for budgetary purposes. The issuance was oversubscribed by three times, indicating encouraging signs that demand for Turkish government papers remained robust despite potential volatility of the Turkish lira and the country’s economic situation.
Sovereign sukuk remains the prominent form of issuance with a 4% y-o-y growth to USD26.7 bil, representing a 65% share of total global sukuk issuances, particularly from the GCC region (34%). The GCC market remained the largest sukuk issuer in 1Q 2022 for the third consecutive quarter, ahead of Malaysia. Despite that, Malaysia remains the largest sovereign issuer with USD13.7 bil (-24% y-o-y), primarily supported by its sovereign issuances (52%). The demand for Malaysia’s sovereign sukuk was still deemed strong with an average book-to-cover ratio of 1.918x, despite cautious investor appetite given the possible overnight policy rate (OPR) hike by its central bank, Bank Negara Malaysia.
