Increasing the Secondary
Market for Sukuks
Overview & Considerations
Ijlal A. Alvi
A MARKET OVERVIEW
1
Global and local sovereign/corporate Sukuk market currently
exceeds an aggregate issuance value of approximately US$ 50
billion to date and is expected to surpass the US$150 billion mark
before the end of this decade
Up till December 2006, US$20.60 billion in Sukuks have been
issued, up 46% from the whole of last year
Malaysian Sukuk issuance to date stands at US$32 billion
approximately
GCC issuance of Sukuk accounts for US$16.5 billion of the global
total, with a growth rate of around 45% a year since 2001
A MARKET OVERVIEW
UNITED KINGDOM
Over the past two years London based financial institutions have
arranged more than a dozen Sukuk issuances on behalf of Middle
Eastern clients, all of them structured in offshore jurisdictions
London Stock Exchange listed its first sukuk – the US$ 200 million
offering by National Central Cooling Company (Tabreed) PJSC. This
should pave the way for further Sukuk listings on the regulated
European markets. Sukuks have previously been listed in
Luxembourg and Dublin
Britain is set to introduce new regulatory framework and tax reforms
to support the domestic issuance of Sukuk by next year
TOTAL SUKUK ISSUANCE WORLDWIDE
(AS OF DECEMBER 2006)
50,000
50,532
Size in Million US$
45,000
40,000
35,000
30,000
25,000
24,091
20,000
15,000
11,829
10,000
5,000
0
336
780
819
2000
2001
2002
5,725
6,947
2003
2004
Year
Source: IFIS
2
2005
2006
Total
issued
GLOBAL SUKUK ISSUANCE WORLDWIDE
(AS OF DECEMBER 2006)
18,000
19,059
16,000
Size in Million US$
14,000
12,000
10,000
8,000
10,105
6,000
4,000
2,501
2,000
0
780
800
2001
2002
3,288
1,585
0
2000
2003
2004
2005
2006
Total issued
Year
TOTAL SOVEREIGN/CORPORATE SUKUK
ISSUANCE WORLDWIDE (AS OF DEC 2006)
45,000
44,043
40,000
Size in Million US$
35,000
30,000
25,000
18,782
20,000
15,000
11,122
10,000
336
0
0
2000
250 530
2001
19
800
2002
6,488
5,468
4,545
5,000
1,180
2003
1,479
2004
1,793
707
2005
2006
Year
Corporate Sukuk Issued
3
Sovereign Sukuk Issued
Total
issued
GLOBAL SOVEREIGN/CORPORATE SUKUK
ISSUANCE WORLDWIDE (AS OF DEC 2006)
12,000
13,528
Size in Million US$
10,000
8,000
5,469
6,000
5,531
4,000
2,582
2,000
1,180
530
800
250
1,479
1,022
1,116
707
405
0
0
2001
2002
2003
2004
2005
2006
Total issued
Year
Corporate Sukuk Issued
Sovereign Sukuk Issued
CONSIDERATIONS – SECONDARY
MARKET
Primary Market State & Development
Efficient Settlement System
Sukuk pricing in a transparent and accessible manner
Forward value of Sukuk and Shariah Acceptability
Listing on Exchanges? What about market makers?
Regional Players?
4
Considerations – Secondary Market
Review of certain common Sukuk structure &
bench marking
Publication of Executed Trades
Short Term Sukuk
Bahrain
Brunei
THANK YOU
5