The new issues that being captured in 2014 YTD totaled $11.8 billion, which represents 26% of the index exposure, according to the Dow Jones Sukuk Index, while the total size of new issues this year is largely in-line with 2013, there are few interesting issuance trends that we observed.
Michele Leung, Associate Director, Fixed Income Indices, S&P Dow Jones Indices has analysed the Sukuk issuance trend, first, the average outstanding par of new issues tracked by the index is on a rising trend and approaching $1 billion. This increase in deal size reflected a stronger investor demand. In fact, some returning issuers such as IDB Trust and Saudi Electric came back to the sukuk market with a larger deal size as well.
Second, she added, the issuing tenor is extending into longer maturities. While historically sukuk was mostly five-year deals, more ten- and 30-year issuances are now tapping into the market, please see Exhibit 2. And if we look at the current overall index exposure, 32% of the total outstanding par amount was issued with the tenor of ten-year or above.
“Last but not least, we continue to see emergence of new issuers in the sukuk market. For example, HK Government and South Africa Sovereign both recently issued a five-year deal, while Goldman Sachs also raised a $500m for a five-year sukuk in the same period.”