Published: June 13, 2023
FAB and Egypt are leading the way in a brisk start to the year after a relatively muted market last year.
Sukuk issuance last year was muted. This was partly a result of generally lower borrowing needs across the companies and countries typically most active in the marketplace. With Brent crude averaging more than US$100 a barrel, many issuers in the oil-exporting nations enjoyed a revenue windfall, which likely won’t be repeated this year as oil prices return to more normal levels. Sukuk industry specialists are forecasting more issuance this year despite rising interest rates and higher general borrowing costs.
The Sukuk market has already seen several benchmark deals in the first quarter of the year after First Abu Dhabi Bank (FAB) issued a US$500mn five-year Sukuk that was priced at a profit rate of 4.581%, which the bank said was less than it would expect to pay in the conventional bond market.
Rula Al Qadi, group treasurer at FAB, described it as “a fantastic result, especially after a very tumultuous 2022 for fixed income”.