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Global sukuk issuance to rise 6% in 2019, Moody's says

The issuance of Islamic bonds, or sukuk, is expected to increase 6% to around $130 billion in 2019, marking the fourth consecutive annual increase, according to Moody's.

In the first half, increased activity in Saudi Arabia and Malaysia helped drive total sukuk issuance of $87 billion, said Nitish Bhojnagarwala, vice president and senior credit officer at Moody's. "We therefore expect second-half volumes to moderate to around $43 billion, though Malaysia and Gulf Cooperation Council countries, particularly Saudi Arabia, will continue issuing regularly," he said.

Governments of the core Islamic finance markets, including Malaysia, Indonesia and GCC countries, are adjusting their funding mix, which reflects their cultural affinity with Islamic finance, the desire to promote Shariah-compliant banking and higher domestic sukuk demand, among other things. The change is supporting long-term growth in sukuk volumes, Moody's said.

Additionally, new entrants, such as certain African countries and Egypt, can help stimulate sukuk issuance, while green sukuk issuance is expected to accelerate as initiatives to fight climate change gain traction, Moody's said.