KUALA LUMPUR: Global long-term sovereign sukuk issuance will stabilise in 2023 at around US$80 billion and US$80-US$85 billion in 2024 after falling for two years, said Moody's Investors Service.
Malaysia, Indonesia and Turkiye will likely be the largest single issuers, partly reflecting higher sukuk refinancing needs and sustained.
Moody's said the sukuk issuance would stabilise because of elevated energy prices which improved fiscal positions of the key issuers, most notably Saudi Arabia.
Moody's vice president and senior credit officer Alexander Perjessy said supportive but lower hydrocarbon prices would continue to bolster fiscal balances of energy-exporting sovereign sukuk issuers.
Most Gulf Cooperation Council (GCC) sovereigns were still recording budget surpluses in 2023-2024, he added.
"Consequently, GCC issuance in 2023 will be mainly driven by governments' decisions to refinance or repay maturing sukuk using surplus funds.
"We expect lower gross issuance from GCC to be broadly offset by higher volumes elsewhere, particularly in Indonesia, where domestic sukuk issuance dipped significantly last year," said Perjessy.
Moody's expects the largest contribution to come from Malaysia and Indonesia. after six years, during which Saudi Arabia accounted for the largest single share of long-term sovereign sukuk issuances.
"This partly reflected higher sukuk refinancing needs and sustained, although modestly improving, fiscal deficits," it said.
Moody's said the recently-announced sukuk initiatives by Egypt and Saudi Arabia posed a small upside risk to its sukuk issuance projections.
"After many years of anticipation, Egypt finally announced its international sukuk issuance program in February and issued its first government sukuk. Meanwhile, Saudi Arabia has announced plans to launch a domestic sukuk savings program aimed at retail investors," it added.