After a slow spell in the mid-2010s, the sukuk market has grown significantly in the last few years. 2019 was a year of record issuances, with over $162 billion of sukuk being issued (31% higher than 2018), and the overall sukuk outstanding reaching $524 billion, the first time that the sukuk industry has crossed the half a trillion-dollar mark. The rise was driven by growing sovereign issuances in the GCC, Malaysia and Indonesia, significant growth in corporate issuances (which grew by 34% in 2019) and the increasing popularity of short term issuances and new instruments such as green sukuk. Trends in 2020 were disrupted by both the Covid-related disruption as well as turmoil in commodity markets. The spread of the novel coronavirus brought economic activity to a halt worldwide in March and April. As some countries brought the first wave under control, and some economic activity resumed, so did sukuk issuances. Most of the issuance since then have come from sovereign issuers financing their Covid relief packages to support businesses and individuals. But as we look towards the new normal that will be in place after the Covid pandemic has been addressed, we can already see the growing significance of ESG and SDG considerations on capital markets. This is expected to continue to drive the development of new sukuk instruments, such as issuances of green and SDG sukuk under the Sustainable & Responsible Investment (SRI) Sukuk Framework in Malaysia, the issuance of green sovereign sukuk by Indonesia and green corporate sukuk by UAE based Majid Al Futtaim, and the recent Euro-denominated green sukuk and dollar-denominated sustainability sukuk issued by the Islamic Development Bank.
