JEDDAH — The global sukuk market is heading into another solid year in 2015, even though some emerging headwinds could slow its progress compared to 2014, said Standard & Poor's in "For Sukuk Issuance, Emerging Headwinds May Cause Turbulence in 2015" report released Tuesday. Sukuk issuance reached $116.4 billion in 2014 compared with $111.3 billion in 2013, and “we expect total issuance to cross the $100 billion mark again in 2015,” it said. "Supporting sukuk issuance is the still-positive economic performance of core markets such as nations in the Gulf Cooperation Council (GCC) and Malaysia, the implementation of new regulatory requirements such as the Basel III liquidity coverage ratio, and increasing interest in sukuk from countries that have not yet tapped the sukuk market looking to diversify their investor base," said Standard & Poor's credit analyst Mohamed Damak, who is also the company's global head for Islamic finance. "At the same time," Damak said, "we foresee some turbulence ahead that could cause overall issuance volumes to be lower in 2015." The US Federal Reserve appears on track to start increasing its benchmark interest rate in the second quarter of 2015, which may reduce liquidity in global capital markets, including emerging markets. Another obstacle for sukuk could come from the drop in oil prices, which could reduce economic growth and ultimately financing needs in core sukuk markets, especially if prices decrease further. — SG
