Demand for sukuks has been growing in recent years in GCC and the rest of the world. Until the end of last year, the sukuk market touched upwards of $180 billion.
The Sukuk market continued to grow in 2021 due to new procedures put in place to improve standardization while more competitors entered the industry.
It is no wonder that there are newer players tapping into the growing market with new offerings for investors.
An agreement with Credit Suisse to offer attractive financing and fund administration services for a US$100 million Sukuk fund was announced by GFH Financial Group (GFH) in February 2022.
Nawal Al- Naji, Corporate Communications Manager at GFH, mentioned in an interview with TRENDS that the US$ 100 million Sukuk fund is one of the more considerable Sukuk funds in the market.
GFH has chosen to launch the Sukuk fund as GFH has a good track record for investing in Sukuk for its books. In addition, its investors are seeking investment products that can provide steady income but still have redemption features, as Al Naji said.
At the same time, the Sukuk funds are expected to provide GFH investors with a profit of 6.5 percent every year.
Investments in the fund will be made in Sukuk and other Sukuk-related securities from various nations and issuers, especially in the Gulf Cooperation Council (GCC).
Through active asset allocation, credit selection, and optimal leverage, GFH aspires to deliver the fund’s above-average long-term investment returns when risk is considered.
Green Sukuk Growth
The total green Sukuk market is worth more than US$ 15 bn according to Refitiniv, with the Islamic Development Bank (IsDB) being the first in the market with a US$ 2.5 bn offering.
However, figures show that Sustainability and green-themed Sukuk were rising in 2021, mainly since large entities are investing in it.
The Islamic Finance Council UK (UKIFC), Her Majesty’s Treasury, the Ministry of Finance in Indonesia, the Islamic Development Bank, the London Stock Exchange Group, and the Global Ethical Finance Initiative (GEFI) created a High-Level Working Group (HLWG) on Green Sukuk in November to minimize greenhouse gas emissions.
Sukuk key players 2021
There are currently approximately US$ 15 bn worth of ESG and green outstanding Sukuk on the market, according to the Refinitiv Sustainable Islamic Finance App.
As Countries:
- Egypt might have been a significant player in the market, mainly after the economic committee has finalized amendments to the law on sovereign Sukuk issued by the Egyptian parliament in February 2021.
- By March 2021, the UK government returned to the market with a US$ 678 million Sukuk issuance.
- On March 29, 2021, the Maldives announced its first Sukuk issuance, raising $200 million.
As Firms:
- In March 2021, the Islamic Development Bank (IsDB) of Jeddah, Saudi Arabia, issued the world’s largest ESG and sustainability Sukuk, equal to US$ 2.5 bn. As a result, it became the largest issuer in the sector, with $5.2bn in total.
- By the middle of 2021, Saudi Aramco’s US$6 bn debut Sukuk had gathered up an order book worth over US$60 bn from a consortium of 29 bookrunners, setting a new record for the company. This Sukuk issuance has the highest ever order book.
- In September, the Arab Petroleum Investments Corporation (APICORP) – a multilateral development financial institution focused on the energy sector in the MENA region – announced that it had launched its inaugural Green Bond Framework.