GCC sukuk issuances set to rise in 2019: S&P

Sukuk issuances are expected to rise as funding need for most Gulf Cooperation Council (GCC) countries will increase in 2019, S&P Global Ratings said on Tuesday.

The ratings agency has reduced oil price assumptions of $55 this year compared to $71 last year.

However, the sukuk market performance is likely to be by dampened by tightening liquidity conditions worldwide, high geopolitical risks in the Middle East, and challenges inherent to sukuk issuances.

"We anticipate total sukuk issuance of $105 billion-$115 billion ($28 billion-$32 billion for foreign currency issuances and $85 billion-$95 billion excluding reopening of instruments) this year," said Mohamed Damak, Head of Islamic Finance, , S&P Global Ratings.

Last year, sukuk issuances reached around $91.4 billion in 2018 ($114.8 billion including reopening, which consists of issuances under local currency unlimited programs).

"If the oil price falls, and stays below $55 for a sustained period, we would expect to see higher sukuk issuance by GCC sovereigns. Accelerating standardization and creating local currency sukuk markets in the GCC could help the industry enhance its value proposition and stimulate growth," he added.