The Sukuk (Islamic bond) market is expected to grow by 30 percent in 2013, led by sovereign sukuk that will continue to dominate, due largely to new countries that will issue sukuk, according to a report from Kuwait Finance House (KFH).

Sovereign issuers led the market share in 2012 despite a record amount of corporate sukuk placed during the year. Total issuances from sovereign entities throughout 2012 reached $80.2 billion as compared to $58.9 billion in 2011, representing a 36.0 percent y-o-y increase. Despite the dominant market share of 61.1 percent, sovereign papers were overshadowed by significant growth in both corporate and government-related entities which grew by 92.4 percent and 103.0 percent to $36.5 billion and $14.5 billion, respectively, the report indicated.

By region, issuances from Central and East Asia continued their growth momentum, climbing by 60.1 percent y-o-y to $104.8 billion during 2012. This was led by Indonesia (+131.1 percent y-o-y, $6.0 billion) and Malaysia (+59.4 percent y-o-y, $97.1 billion).

Meanwhile, issuances from the Middle East and North Africa also increased by 34.4 percent y-o-y to $26.3 billion, mainly led by the 278.2 percent y-o-y jump in issuances from Saudi Arabia to $10.5 billion and the 49.3 percent y-o-y increase in issuances from the UAE to $6.1 billion.

It will be interesting to see just which countries will issue sovereign sukuk in 2013, especially if non-Islamic nations start to do so. Such a development would be a sign that Islamic economic imperialism is having the desired effect…



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