The total global sukuk issuance for both government and corporate is estimated at $44 billion this year, with Malaysia accounting for 60 per cent or close to $26 billion.
Last year, the global sukuk issuance totalled $26.5 billion.
HSBC Amanah Malaysia Bhd’s Chief Executive Officer Rafe Haneef said sukuk issuance in Asia was expected to be the highest this year, led by Malaysia.
Infrastructure projects in Asia, he said, were likely to be a significant driver of sukuk issuances.
“The sukuk market is already off to a strong start in 2012, and we are confident that there will be more in the pipeline given the Asian issuers and investors’ increasing appetite for sukuk offering in both foreign currency and local currency,” he said during a media briefing today on 2012 Sukuk Outlook.
Haneef said countries in Asia were taking proactive steps to boost and position their role in the sukuk market.
“Hong Kong has issued a consultative paper on sukuk laws seeking response from the market whether provisions drafted in the country were adequate to provide the right platform,” he said.
If Malaysia wants to aspire to be a financial hub, there is a need for more US dollar sukuk issuances out of Malaysia, he also said.
He attributed the few number of US dollar sukuk issuances in Malaysia to lack of incentives among market players to go for sukuk issuances in US dollar due to plenty of liquidity in ringgit in Malaysia.
“The advantage of US dollar sukuk issuances in Malaysia will be that the credit of companies will be regularly monitored by investors abroad and this will enable support from international investors.”
According to Haneef, the Malaysian sukuk market catered to investors who demand Islamic solutions while the sukuk market in Hong Kong and Singapore catered to investors who want to tap alternative sources of financing.
Meanwhile, the director and Head of Debt Capital Markets, Global Capital Financing, HSBC Amanah Bank Malaysia Bhd, Wynce Low said Malaysia continues to spearhead the sukuk market. “More projects being rolled out under the government’s Economic Transformation Programme (ETP) would boost the sukuk market here,” Low said during the briefing.
With the Projek Lebuhraya Usahasama Bhd (PLUS) RM31 billion sukuk (world’s largest corporate sukuk) and Tanjung Bin Energy Issuer Bhd’s RM3.29 billion sukuk issued in the first quarter alone, Malaysia is headed for a record year in 2012, Low said.
“We believe Malaysia will continue to lead innovation and expand the sukuk market, following the highly successful dual tranche $2 billion Sukuk Wakala issued by the government of Malaysia in 2011.”