Latest news with #sukuk
Khaleej Times
2 days ago
- Business
- Khaleej Times
Global sukuk market increasingly becoming attractive for mainstream investors
At $930 billion in size, the market for sukuk – often described as the Islamic world's equivalent to bonds – is becoming increasingly difficult for mainstream investors to overlook. While sukuk-focused funds remain small, with just $5.8 billion in assets under management, the space has seen notable developments in recent years, including the rise of passive ETFs, a study showed. While the sukuk market grew to $930 billion in outstanding securities by the end of 2024 (up from $863 billion in 2023), the market for funds investing in sukuk is tiny by comparison, data from Morningstar shows. Sukuk funds totalled $5.8 billion in assets in May 2025 (up from $5.0 billion a year earlier). Islamic banks dominate sukuk ownership, resulting in a market characterized by shallow trading and low liquidity. The market for sukuk funds aimed at global investors includes a small but growing cohort of both passive and active options. Fees for passive sukuk ETFs, which largely focus on the investment-grade market, fees range from 0.35 per cent to 0.50 per cent (reasonable, though higher than comparable bond options). Fees for US dollar-denominated actively-managed sukuk funds average 1.34 per cent (pricey compared to conventional global diversified or emerging-markets bond funds). Active sukuk funds often have more room to boost yields by investing in riskier, below-investment-grade issuers. 'As the global sukuk market expands, its relevance and appeal to investors seeking Shariah-compliant options have grown. Still, the market's concentration in specific geographies and heavy exposure to a few issuers makes it less suitable as a long-term core allocation compared to more diversified conventional bond strategies. However, for investors restricted to Shariah-compliant vehicles, the range of both active and passive sukuk funds is widening. Sukuk have not been immune to short-term volatility as geopolitical risks exploded in the Middle East in 2025, but many sukuk managers argue that issuers in the region retain strong fundamentals, and that credit deterioration should be fairly contained,' commented Shannon Kirwin, Principal, Fixed Income Ratings at Morningstar. The sukuk market's infrequent trading and largely buy-and-hold investor base have yielded a key benefit for sukuk investors: historically lower price volatility compared to conventional bonds. However, this feature could diminish if funds become a more meaningful portion of the market – and it should not be mistaken for a lack of credit risk. Standards boards, particularly the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAIOFI) and the Malaysia-based Islamic Financial Services Board (IFSB) play important roles in establishing and maintaining norms in the sukuk market. Currently, the AAIOFI is considering tightening its standards for the treatment of asset-based sukuk (its upcoming Standard 62), which some observers worry could prove disruptive to the market. Fund managers and experts who spoke with Morningstar for this paper, however, expressed optimism that the board would ultimately err on the side of preserving market stability. Despite its lower price volatility, the sukuk market's strong geographic skew towards a few regional markets (Gulf countries dominate hard-currency issuance while Malaysia dominates local-currency issuance) makes the asset class less suitable as a core portfolio building block for conventional investors than a diversified global bond allocation, analysts say. However, for Muslim investors otherwise unable to tap fixed-income funds, the sukuk market offers a compelling solution.
Arab News
2 days ago
- Business
- Arab News
Closing Bell: Saudi main index rises to close at 11,068
RIYADH: Saudi Arabia's Tadawul All Share Index rose on Thursday, gaining 94.29 points, or 0.86 percent, to close at 11,068.27. The total trading turnover of the benchmark index was SR5.72 billion ($1.52 billion), as 206 of the stocks advanced and 40 retreated. The Kingdom's parallel market Nomu gained 215.80 points, or 0.80 percent, to close at 27,053.10. This comes as 54 of the listed stocks advanced while 31 retreated. The MSCI Tadawul Index increased 11.41 points, or 0.81 percent, to close at 1,418.88. The best-performing stock of the day was Ades Holding Co., whose share price rose 6.97 percent to SR13.82. Other top performers included National Gypsum Co., whose share price increased 5.66 percent to SR22.40, as well as Zamil Industrial Investment Co., which rose 5.42 percent to SR42.80. Specialized Medical Co. recorded the most significant drop, falling 3.31 percent to SR23.36. Saudi Advanced Industries Co. also saw its stock price fall 2.55 percent to SR26.75. Al-Taiseer Group Talco Industrial Co.'s stock price declined 2.27 percent to SR43.10. Dar Al-Arkan Real Estate Development Co. has closed its 14th sukuk issuance, marking the tenth tranche under its USD-denominated Islamic Sukuk Program, with a total size of SR2.81 billion, the company said in a statement to Tadawul. The five-year sukuk, carrying an annual profit rate of 7.25 percent, was issued on June 25 and attracted strong demand from both regional and international investors. The order book reached SR10.8 billion, nearly four times oversubscribed, according to the bourse filing. The issuance comprised 3,750 sukuk units, each with a par value of $200,000. Dar Al-Arkan appointed Abu Dhabi Commercial Bank PJSC, Abu Dhabi Islamic Bank PJSC, Alkhair Capital, Al Rayan Investment LLC, Arqaam Capital, Bank ABC, and Dubai Islamic Bank as joint lead managers for the transaction. Also on the mandate were Emirates NBD Capital, First Abu Dhabi Bank, J.P. Morgan, as well as Mashreq, Sharjah Islamic Bank, Standard Chartered Bank, and Warba Bank. Shares in Dar Al Arkan ended the session marginally lower, closing at SR19.22, down 0.10 percent. The Board of Directors of Sahara International Petrochemical Co., also known as Sipchem, has approved SR362 million in cash dividends for the first half of 2025, according to a statement published on Tadawul. The payout applies to 752 million eligible shares, translating to a dividend of SR0.50 per share, or 5 percent of the share's par value. Shares in Sipchem closed the session higher at SR19.06, gaining 4.24 percent.
Zawya
2 days ago
- Business
- Zawya
Egypt resumes international sukuk issuance with $1bln offering amid regional headwinds
Arab Finance: Ministry of Finance has resumed its international sovereign sukuk issuance plan, launching a second $1 billion issuance despite ongoing regional challenges, as per a statement. The Sharia-compliant sukuk carries a 7.875% annual coupon and a three-year maturity. The issuance was carried out as a private placement for fiscal year (FY) 2024/2025. It comes amid heightened geopolitical tensions and market uncertainty, but was made possible by a marked improvement in Egypt's economic conditions and key financial indicators. This latest issuance follows the country's first sovereign sukuk offering in February 2023 and forms part of a broader $5 billion sukuk program. The move aligns with the ministry's strategy to diversify financing tools, currencies, and investor bases, while extending debt maturity and lowering external debt servicing costs. The sukuk was fully subscribed by Kuwait Finance House, one of the world's largest Islamic banks, reinforcing Egypt's financial ties with Kuwait. The ministry emphasized that the issuance demonstrates Egypt's continued ability to secure favorable financial terms and advance its diversification agenda, even under strained global conditions. It also reaffirmed its commitment to reducing external debt for budget entities by approximately $1 to $2 billion during the current year, with preliminary indicators supporting this objective. © 2020-2023 Arab Finance For Information Technology. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
2 days ago
- Business
- Zawya
Saudi Dar Al-Arkan's $750mln sukuk priced
Saudi Arabia-based Dar Al-Arkan Real Estate Development Co.'s 5-year Regulation S $750 million sukuk has been priced at 7.250%, tightening from initial price thoughts in the 7.750% area. The reoffer yield for the senior unsecured sukuk is 7.375%. The Ijara-commodity Murabaha sukuk is expected to be rated B1 by Moody's. The issuance will be listed on LSE's Main Market and Nasdaq Dubai. (Writing by Brinda Darasha; editing by Daniel Luiz)
Khaleej Times
3 days ago
- Business
- Khaleej Times
Democratising sukuk: How fractional access is reshaping Islamic Finance
For years, Islamic finance has promised fairness, accessibility, and ethics. Yet, many of its key investment tools, like those in conventional banking, have been reserved for the few. Sukuk, Islamic fixed-income instruments, are a prime example. While they've become central to Islamic capital markets, they've remained largely out of reach for retail investors. That's not due to a lack of interest or supply. The global sukuk market size reached $1.21 trillion in 2024 and is forecast to reach $3.99 trillion by 2033, with the ESG sukuk market surpassing $50 billion in outstanding value by the end of 2024, according to a report by LSEG. The challenge, however, has always been access. Minimum investment thresholds in the hundreds of thousands have made sukuk the territory of institutions and high-net-worth individuals. That is changing. Fractional sukuk, offering smaller, more affordable portions of these instruments, are slowly opening the doors to a wider audience. It's a fairly simple idea: instead of requiring at least $200,000 to participate, investors can now get started with just a fraction of that. There is a growing trend to democratise access to sukuk investments, catering to retail investors who can invest as low as $1,000 in Sharia-compliant fixed-income opportunities. This development challenges the long-standing assumption that capital markets are, by nature, exclusive. But if sukuk are designed to reflect shared risk, asset ownership, and ethical investing, why should they have limited access? That question has prompted a complete rethink of the model. It also responds to a shift in investor behaviour. Across the globe, younger generations are becoming more financially aware. New research from the World Economic Forum finds 30 per cent of Gen Z began investing in university or early adulthood, compared to 15 per cent of millennials, 9 per cent of gen x and 6 per cent of baby boomers. In today's unpredictable global economy that frequently disrupts traditional markets, investors are searching for safer ground. Sukuk, as fixed-income instruments, offer the kind of reliability that's increasingly hard to find. They're also digital first, with little patience for the paperwork-heavy, opaque processes that have traditionally accompanied sukuk investments. This is where the combination of fractional ownership and digital access really matters. ADIB, for instance, has taken a digital-first approach by offering a platform that supports fractional ownership through a streamlined digital interface allowing users to browse, subscribe to, and monitor sukuk investments, making access easier, faster, and more aligned with digital-native investor expectations. According to Fitch Ratings, GCC sukuk issuance grew by 43 per cent YoY in 2024 to $87.5 billion, outpacing bonds (+1.1 per cent). Islamic banks are a large part of the GCC banking system and are key sukuk investors and issuers. The UAE remains a key global player in the sukuk market, accounting for 6.5 per cent of total global outstanding sukuk as of Q1 2025, ranking fourth worldwide after Malaysia, Saudi Arabia, and Indonesia. 'Fractional sukuk reflect the future of inclusive finance in the region. By combining accessibility with Sharia-compliant innovation, we're enabling a new generation of investors to build wealth in a way that aligns with their values. This isn't just about offering smaller ticket sizes, it's about reimagining the way finance serves people,' Amit Malhotra, Global Head of Retail Banking at ADIB, told Khaleej Times. Of course, lower entry barriers come with responsibilities. Investors must be well-informed. Transparency around risk, returns, and terms is essential. Regulators and financial institutions will need to ensure that accessibility doesn't come at the expense of oversight. Still, the bigger picture is encouraging. By bringing sukuk into the portfolios of everyday people, the Islamic finance industry has a chance to reconnect with its founding promise: that finance should serve the community, not just the elite. There is still work to be done, expert say. Public understanding of the product remains limited across many markets. But the direction is clear. 'Fractionalisation may seem like a technical adjustment, but it signals a larger shift in how financial products are designed, distributed, and perceived,' an analyst said. At a time when investors are reevaluating what responsible investing means, Islamic finance has a timely opportunity, not by becoming more complex, but by becoming more inclusive, more accessible, and more aligned with its core values. Making sukuk more accessible marks a meaningful step toward a more inclusive financial system, and it might just define the next chapter of Islamic investing.
