The head of the Islamic Finance Department at the agency, Mohamed Damak, revealed that the volume of Sukuk issuances decreased by 32% in the first quarter of this year, expecting that the decrease in the volume of issuances would be more severe in The second quarter, with the core Islamic finance countries beginning to implement precautionary measures related to the Corona virus last month, estimated that the volume of their issues this year will reach $ 100 billion, which is about 40% less than the issues registered in 2019.
Damak said: The complexity of sukuk issuances is likely to make a secondary option for some governments, and most of them may instead turn to traditional bond markets, as the current environment may lead to Uncertainty due to a significant rise in default rates, especially for creditworthy exporters.
He added: We believe that the sukuk market will witness a significant decrease in the volume of issuance in 2020 due to a significant impact from the decline in oil prices and the restrictions related to the Corona virus in important sectors related to Islamic finance, including It includes real estate and hospitality.
Damak stressed that government closing procedures will lead to fewer sukuk issuances from companies and central banks, noting that most government issuers of sukuk may resort to traditional bond markets because of their suffering. With the impact of the weak economic environment on their budgets, in addition to that the issuance of Sukuk is still more complicated than the issuance of conventional bonds.
The head of the Islamic Finance Department (SP) expected the sukuk market to recover in the third quarter of 2020, saying: But we do not think sukuk issuances in the rest of 2020 will be sufficient to offset Declines in the first half of the year.
