SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

The global sukuk issuance has witnessed a decline in 1H2021 after the funding requirements of GCC countries reduced as oil prices have trended higher this year. A drop has been observed in sukuk issuance from UAE after it adopted the Shariah-compliance standards. According to Moody’s, the issuance by UAE and Bahrain dropped by 65% to $4bn in 1H2021. Ashraf Madani, a vice president and senior analyst at Moody’s said, “Sukuk issuance will be flat or slightly lower this year, as higher oil prices have reduced sovereign funding needs in the GCC countries”. While issuances from GCC countries are expected to slow, the rating agency expects issuance activity in South East Asia to gain momentum as economic activity picks up and funding needs increase, with Malaysia expected to lead the issuances in the region. The global sukuk issuance volume is expected to be $190bn-$200bn this year vs. $205bn last year after Brent crude rose almost 100% to ~$72, from the lows reached in March last year. Rating agency S&P forecasts global market conditions to remain supportive for sukuk issuances with low interest rates and abundant liquidity after economic activity has picked up with more people getting vaccinated. S&P’s credit analyst Mohamed Damak said, “We expect sukuk issuance will reach $140 billion-$155 billion in 2021, compared with $139.8 billion in 2020. In first-half 2021, sukuk issuance totaled $90.6 billion, compared with $86.4 billion at June 30, 2020, thanks to Malaysian and Saudi Arabian issuances,”.

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