The global Islamic finance industry has achieved a monumental milestone, with cumulative issuances of Sharia-compliant bonds, known as sukuk, officially crossing the historic US$ 1 trillion threshold. This significant financial benchmark has been reached following decades of steady growth, expansion, and increasing integration into mainstream international capital markets since the issuance of the first modern sukuk in 1996.
According to comprehensive financial data released in the 2019 Islamic finance development indicator report—produced by the Islamic Corporation for the Development of the Private Sector (ICD), an arm of the multilateral Islamic Development Bank—the market has demonstrated remarkable resilience and expanding depth. As of the close of 2018, the total volume of outstanding sukuk stood at an impressive US$ 469.7 billion, distributed across 2,887 distinct issuances globally.
Market activity remained robust throughout the year 2018. New sukuk issuances during the twelve-month period reached US$ 14.8 billion, matching the strong performance and volume levels recorded in the previous year. This sustained level of issuance underscores the ongoing demand for Sharia-compliant financial instruments from both sovereign and corporate entities seeking alternative avenues for capital raising, infrastructure funding, and liquidity management.
Saudi Arabia and Malaysia Lead Global Issuances
Geographically, the momentum of the global sukuk market in 2018 was heavily anchored by sovereign activities in Saudi Arabia and Malaysia, which emerged as the largest national issuers of these financial instruments during the period. Data highlighted in the Islamic Corporation for the Development of the Private Sector report shows that the governments of Saudi Arabia and Malaysia spearheaded the market, recording sovereign issuances valued at US$ 17.1 billion and US$ 13.9 billion, respectively.
Malaysia successfully maintained its longstanding lead position in terms of overall issuance volume, a performance significantly boosted by a strategic policy shift from the country’s central bank. Bank Negara Malaysia orchestrated a notable return of short-term murabaha sukuk to the domestic market, reviving an instrument that had been absent for a considerable duration.
The central bank’s decision to resume short-term sukuk issuances followed a three-year hiatus, injecting renewed liquidity and activity into the local financial ecosystem. Capitalizing on this strategic return, Bank Negara Malaysia issued US$ 16.1 billion in short-term sukuk during the second half of 2018 alone. This concerted monetary and financial maneuver not only reinforced Malaysia’s premier standing within the international Islamic finance architecture but also provided the market with a vital benchmark for short-term liquidity management, further cementing the nation’s reputation as a pioneer and core hub for modern Islamic capital markets.