Global sukuk issuance volumes will decline in 2022 as lower, more expensive liquidity, increased complexity, and reduced financing needs for issuers in some core Islamic finance countries will deter the market, S&P Global Ratings said in a new report.

Total sukuk issuance dropped to $74.5 billion in first-half 2022 compared with $93.3 billion during the same period in 2021, both in local and foreign currency.

Shrinking global liquidity, increasing complexity related to regulatory standards, and lower financing needs in some core Islamic finance markets will hold back issuance for the remainder of the year, S&P said in its bi-annual sukuk market update titled “Global Sukuk Issuance 2022: How Low Can It Go?”.

Consequently, and even though S&P expects governments' local currency issuances will continue to support the development of domestic capital markets, S&P now forecast total issuance of about $130 billion in 2022 versus $147.4 billion in 2021.

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