Tuesday, June 28, 2011 - 09:52
WASHINGTON (MNI) - While the amount of sukuk -- Islamic bonds -- issued in 2011 is on track to exceed last year's volume, the pace is expected to drop off in the coming months and only a tiny fraction will be issued in U.S. dollars according to one industry observer.
Developments in the sukuk market have been as expected, Paul-Henri Pruvost, a credit analyst at Standard & Poor's told Market News International, meaning higher growth compared to last year, with about 80% of issuance by sovereigns, particularly Malaysia.
"That's really the bulk of the market," he said. "Malaysia is very much driving the market."
Corporate issuers -- or financial institutions for that matter -- have not been very active in the sukuk market, he added, predicting that "it will remain a sovereign story, at least until the global economy shows some signs of convalescence or recovery."
Going forward, Pruvost said there is a huge pipeline of government-backed projects in the Gulf, which will likely encourage corporate entities to tap the market for funding next year.
Pruvost noted that year-to-date issuance in the sukuk market is at about $43 billion, on pace to outstrip last year's total of $51 billion.
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