The global primary sukuk market thrust forward with momentum as new issuances surged by almost 72% month-on-month to record USD 12.94 bln worth of volume in September, said the monthly report issued by Kuwait Finance House (KFH) today.
The primary market witnessed several milestone deals which have set the global sukuk market well on course to achieve new growth frontiers and expand its market outreach. Notably, four sovereign issuers launched their debut sovereign sukuk programmes last month among which included three non-Organisation of Islamic Cooperation (OIC) countries, said the report.
Following months of anticipation, the Government of Hong Kong debuted in the global sukuk market with a huge USD 1 bln 5-year sukuk tranche that was oversubscribed by 4.7 times.
In the same week, the Emirate of Sharjah also achieved success by being the first issuer to launch a longer-term 10-year maturity sukuk on debut which was worth USD 750mln and attracted a substantial oversubscription by 10.5 times. Subsequently, the Government of South Africa also issued a USD 500mln 5.75-year maturity debut sovereign sukuk which provided investors a unique Shari'a compliant opportunity to gain exposure to the international Sub-Saharan African fixed-income market and this programme attracted a 4.4 times oversubscription.
Finally, Luxembourg also closed its debut sovereign deal towards the end of the month with a EUR 200mln programme which provided investors a rare opportunity to gain exposure to a Euro-denominated sovereign deal.
It is pertinent to note that all four sovereign sukuk were structured on the Ijarah contract, signalling the growing popularity of this structure among international issuers, in particular sovereigns, said the report. The merits were not only restricted to the sovereign sukuk market as the American investment bank, Goldman Sachs and the Malaysian subsidiary of the Japanese financial institution, Bank of Tokyo-Mitsubishi UFJ (BTMU) also debuted in the corporate sukuk market.
Goldman Sachs created history by becoming the first US investment bank to tap the global sukuk market with a debut USD 500 mln deal which was oversubscribed by three times.
The Goldman Sachs deal is a rare opportunity for Islamic investors to have exposure into the US financial sector and its success could effectively encourage other global investment banks to consider tapping the Islamic liquidity through the sukuk market. Meanwhile, BTMU (Malaysia) debuted by issuing two international currency sukuk in Malaysia: a 25mln US Dollar tranche and more significantly a JPY2.5bln (USD23mln) tranche which represents the global sukuk market's first Japanese Yen sukuk offering.
Overall, the global primary sukuk market's volume has reached USD 94.65 bln in three quarters ended September 2014 (3Q14), a 14.1% increase in volume as compared to the USD 82.99 billion issued last year in the same period (3Q13), said the report.