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"KFH Research": USD 120 bln Sukuk issuances in 2013

KUWAIT, Jan 7 (KUNA) - KFH-Research, a subsidiary of Kuwait Finance House Group, KFH group, said in its sukuk monthly report that the total Sukuk issuances in December stood at USD 14.1 bln, an increase of USD 6 bln over last November, bringing the total sukuk issuances for 2013 to about USD 120 bln.
The report added that Saudi Arabia, the United Arab Emirates and Qatar issued sukuk of USD 3.3 bln during December, while Malaysia whose currency is the ringgit came in the first place in terms of issuance volume and Saudi Riyal came in third place after the ringgit and the U.S. dollar in terms of the currency issuance.
Moreover, the report explained that Sukuk issuance during the month of December reflected investors' desire to get cheaper funding rates. According to the report, the total issuance of sukuk during December was 126 compared to 53 in November, and 66 in October 2013.
The share of the corporate sector was 97 issuances while the total sovereign issuances was 22 and related governmental bodies issued 7 issuances in December 2013. Thus, the share of Sukuk issuances by companies was 66% of the primary market in December 2013, while sovereign bodies sukuk counted for 32.3 %. December saw another significant amount of sukuk sales, totalling USD14.
1bln (November: USD8.3bln), as expectations for the Federal Reserve to taper bond purchases intensified given back-to-back positive jobs reports.
Fears that the Fed's taper will cause interest rates to rise further has triggered a wave of issuance during the 4Q13 (up 68.5% q-o-q) with issuers looking to take advantage of cheaper funding rates. Total Issuance volume for 2013 came in at USD 119.7bln, 8.7% less than in 2012.
Malaysia accounted for the largest share of the sukuk market during the month with 72.8% of the issuance total. December saw new issuances from a number of jurisdictions such as the UK, Yemen and Singapore, which collectively accounted for 1.8% of issuance volume.
Qatar, Saudi Arabia and the UAE continue to witness strong growth this year with further issuances amounting to USD 1.5bln, USD1.1bln and USD 750mln respectively during the month. Notable issuance during the month include the USD 1.25bln paper by Qatar's Ooredoo Tamweel Limited. Its debut sukuk has a yield of 3.039% or 160bps over mid-swaps, which is directly comparable to the conventional bonds of Qtel (Qatar Telecom). The books were 400% oversubscribed having passed subscriptions worth USD4.5bln. The sukuk was given a rating of A+ by Fitch and has a 5-year maturity.
Corporate issuers made up 66.0% of the primary market in December, while sovereigns accounted for 32.3% and government related entities took the remaining 1.7%. The Malaysian ringgit accounted for 72.8% of issuances during the month, followed by the US dollar (14.2%) and the Saudi riyal (7.6%).
A total of 126 sukuk were issued in December vs. 53 sukuk in November and 66 in October. Among these, 97 were issued by the corporate sector totalling USD 9.3bln (November: USD 2.2bln, +330.5%), 22 by sovereigns totalling USD 4.
5bln (November: USD 5.8bln, -21.8%) and 7 by government related entities worth USD 237.1mln (November: USD 312.0mln, -24.0%). (end) fnk.ajs KUNA 071645 Jan 14NNNN