A Fitch-analyzed sukuk index outperformed an EM bonds index in Q1 2022 primarily due to the higher weight of oil exporters in the sukuk index, Fitch said in a research note. It said that the sukuk index fell 4% while the EM bonds index fell by 10% YTD, ending March 2022. It added that dollar denominated sukuk issuances across “Emerging Markets (EMs) have been less affected than bonds amid the volatilities” in Q1 2022. The quarter saw a 4% QoQ growth in EM sukuk issuances to $53bn (all currencies ex-multilateral institutions) and a 56.8% growth in dollar sukuk issuances. EMs ex-China saw a 26.6% QoQ drop in issuances to $466.1bn with dollar bond issuances falling 19.7%, as per Fitch data. Growth in dollar-denominated sukuk issuances halted in March thanks to the Russia-Ukraine crisis, higher oil prices, rising interest rates and inflation. Fitch notes that while most sukuk issuers in core markets have little exposure to the Russia-Ukraine conflict, the indirect exposure varies. It said that the long-term view of issuances is “solid”, with risks to issuance volumes coming from an increase in oil prices which can reduce funding needs.

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