Reports and Articles
Sovereigns – Global: Long-term sovereign sukuk issuance to moderate in 2021 as financing needs ease
Following a record year in global long-term sovereign sukuk issuance driven by the extraordinary increase in gross financing requirements for major sukuk-issuing sovereigns, we expect issuance to decline slightly this year as financing needs narrow…...
Islamic banks – South and Southeast Asia: Sector is well positioned for continued growth as economies
Islamic banks in Bangladesh (Ba3 stable), Brunei (unrated), Indonesia (Baa2 stable), Malaysia (A3 stable) and Pakistan (B3 stable) have ample capital and liquidity buffers to meet increased demand for financing in 2021 as economies bounce…...
Cross-Sector – Islamic Finance: Growth prospects remain strong despite challenges from pandemic
Despite the pandemic-driven weakening in operating environments across the globe, Islamic financial markets continued to expand in 2020 as demand for Shariah-compliant products remained resilient. In 2021 and beyond, we expect that Islamic finance will…...
Financial Institutions – Turkey: New Participation Finance Office will benefit Turkey’s Islamic finance banks
On 8 February, Turkey announced the establishment of a new department within the President’s Finance Office that will focus on raising awareness of the Islamic finance, facilitate collaboration among public entities, corporates and universities and…...
Banks – Uzbekistan: Islamic finance windows would be credit positive for Uzbek banks
On 3 December, Islamic Corporation for the Development of the Private Sector (ICD, A2 stable) announced that it had signed an advisory services agreement with Uzbekistan’s stateowned Xalq Bank, the country's sixth-largest bank by total…...
Government of Malaysia – A3 stable
Moody’s regards Malaysia's (A3 stable) credit profile as being underpinned by its large, diversified and competitive economy, ample natural resources and strong medium-term growth prospects. A large pool of domestic savings supports the high government…...
Omani government’s first retail sukuk issuance increases Islamic finance penetration
On 10 November, the Government of Oman's (Ba3 negative) Ministry of Finance announced a OMR25 million ($65 million) sukuk issuance, the government’s first sukuk issuance available to retail investors1 . The issuance is credit positive…...
Moody’s discuss sovereign credit perspectives related to the Kingdom of Saudi Arabia
In this exclusive episode of the Moody's podcast for IFN, Christian de Guzman and Alexander Perjéssy discuss sovereign credit perspectives related to the Kingdom of Saudi Arabia....
Tightening liquidity will hinder recovery of receivables, eroding profitability
Insurers in the Gulf Cooperation Council (GCC) countries are more exposed than their European peers to the risk of recoverability of their receivables over the next 12-18 months, as their counterparties' liquidity tightens across the…...
Enhanced awareness and regulation will fuel growth in largest African Muslim market
Islamic finance penetration is very low in Nigeria but is starting to gain a foothold as the authorities seek to increase banking penetration in the country's large Muslim population. The Central Bank of Nigeria (CBN)…...
Higher government efforts remain key to gear up the sector for growth
Islamic banking remains nascent in North Africa, largely for historical and political reasons. In recent years, however, many governments have started to lay out legal and regulatory frameworks that will set the stage for expansion,…...
Africa’s vast financing needs will drive growth in Islamic finance
Islamic banking has made little headway in Africa despite the continent's large Muslim populations. For example Sub-Saharan Africa has around 16% of the world's Muslim population but its Sharia-law compliant banking assets make up only…...
More banks converting into Islamic banks is credit positive for the sector
Since the start of 2020, Bangladesh Bank (BB), the central bank of Bangladesh, has approved the requests of three banks to convert to Islamic banks, indicating an increase in the central bank's willingness to allow…...
Merger of state-owned banks’ Islamic subsidiaries will be credit positive for Islamic banking
On 12 October, Bank Negara Indonesia (P.T.) (BNI, Baa2 stable, baa31 ), Bank Raykat Indonesia (P.T.) (BRI, Baa2 stable, baa2) and Bank Mandiri (P.T.) (Mandiri, Baa2 stable, baa3), together with their Islamic subsidiaries, signed a…...
Shift to Islamic finance continues apace despite challenges facing the economy
Saudi Arabia is the world's largest market for Islamic finance. Despite the pandemic-induced economic recession and sharp oil price decline, we expect the ongoing shift to Shariahcompliant finance in Saudi Arabia to continue over the…...
Coronavirus-related drop in claims drives strong H1 profit, but pressures persist
Saudi Arabia’s (A1 negative) 31 active primary insurers reported a sharp increase in profitability in the first half of 2020, as claims reduced significantly as a result of coronavirusinduced “lockdown” measures. However, we expect future…...
Islamic asset managers show resilience to coronavirus pressures
Coronavirus-related economic and market upheavals have strained Islamic asset managers’ revenue and cash flow, but the sector has remained relatively resilient thanks to persistently strong demand for Shariah compliant investments. Growth in Islamic assets under…...
Saudi Electricity’s green sukuk highlights investor appetite for sustainable finance
On 10 September 2020, Saudi Electricity Company (SEC, A2 negative) finalised the terms of a multi-tranche $1.3 billion green sukuk. SEC reported an order book of more than $5.2 billion for the offering, highlighting the…...
Slow growth and low oil prices are key challenges for GCC asset managers
The profitability of asset managers in most Gulf Cooperation Council (GCC) countries will face moderate to high pressure over the next 12-18 months, reflecting the coronavirus crisis and an accompanying drop in oil prices. These…...
Moody’s sovereign sukuk primer – Saudi Arabia
In Moody’s view, Saudi Arabia’s (A1 negative) credit profile is underpinned by the government's robust but deteriorating balance sheet, and supported by substantial external liquidity buffers. However, government revenue remains vulnerable to declines in oil…...
Characteristics of asset-based sukuk
Sukuk come in two forms, “asset-based” and “asset-backed”. Asset-based sukuk, despite having assets in their structure, are effectively a pass-through of the unsecured credit risk of the obligor. The obligor may be a corporate, bank,…...
Jump in funding needs drives sukuk issuance, even with decline in funding mix
A recovery in market conditions and an increase in the gross borrowing requirements of the world's largest sukuk sovereign issuers will lead to a rise in nominal sukuk issuance this year greater than we had…...
Structural features will underpin Islamic banks’ resilience against coronavirus fallout
Economic disruptions from the coronavirus will be detrimental to Islamic banks, but a concentration on retail financing and other structural features will help them withstand financial stress....
Sukuk issuance set for modest decline despite coronavirus outbreak
We expect sukuk issuance to fall by just 5% this year, despite the Coronavirus outbreak, reversing four consecutive years of rapid growth. Some $77 billion in sukuk was issued in the first six months of…...
GCC and Malaysia will drive growth across Shariah-compliant products in 2020
The Islamic finance sector remains underrepresented in the global financial system and has ample room to expand. We expect it will do so in 2020 and beyond as demand for Shariahcompliant financial instruments continues to…...
Islamic banking poised for rapid growth despite a slow start
We expect Turkey's Islamic banking assets to double over the next five to 10 years to 10% of total banking assets from a low base of current 5.8% as the government injects new momentum into…...
Legal and regulatory shortfalls, coupled with growing asset risks, will limit growth
Islamic banking in Bangladesh has ample growth potential, underpinned by a robust domestic economy and an expanding population with a large pool of untapped customers. However, a lack of comprehensive legal and regulatory infrastructure, coupled…...
GCC asset managers benefit from economic diversification, foreign investment
The asset management industry in the Gulf Cooperation Council (GCC) countries is set to grow at a steady pace over the next decade, supported by the region's increased diversification away from oil, and by new…...
Sukuk market continues to grow – H1 2019 Update
We expect total sukuk issuance of around $130 billion in 2019, at the top end of the $120-$130 billion range we projected at the beginning of the year, and up from $123 billion in 2018.…...
Increasing government efforts position the sector for rapid expansion
Islamic banking in Commonwealth of Independent States (CIS) countries remains underdeveloped, although the region has a large Muslim population. Governments, however, are stepping up efforts to develop the sector by laying out legal and regulatory…...
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