Issuances of Islamic bonds globally hit a record high in 2020, rising 20 per cent annually to $175 billion, driven by demand in Asia and the Middle East as the market remains attractive to issuers and investors, despite the Covid-19 pandemic, according to the International Islamic Financial Market (IIFM). The longer tenor sukuk issuances by sovereigns and financial institutions, along with an increase in short-term sukuk issuances, drove last year's record growth, the IIFM said. More than 90 per cent of the $648bn sukuk outstanding globally were issued by Malaysia, Saudi Arabia, Indonesia, the UAE and Bahrain, while the market share of Pakistan, Oman, Nigeria, Egypt and regions such as Africa is increasing, the organisation said. About $98.4bn in sukuk, with an issue size of $100 million or above and with tenor of more than a year, is set to mature in 2021 and 2022. “Although the effects of the unprecedented situation caused by the Covid-19 pandemic continued during the year, the impact of pandemic was confined and limited to a few corporate issuers and overall sukuk remained an attractive instrument and the positive growth trajectory continued during first half of 2021,” Khalid Al Hamad, chairman of the IIFM, said in the <a href="https://www.iifm.net/wp-content/uploads/2021/08/IIFM-Sukuk-Report-10th-Edition.pdf" target="_blank">219-page report. </a> Global sukuk issuance is set to increase 11 per cent to as much as $155bn in 2021, driven by low interest rates and abundant liquidity, S&P Global Ratings said in a separate <a href="https://www.thenationalnews.com/business/2021/07/05/global-sukuk-issuance-may-hit-155bn-in-2021-sp-says/" target="_blank">July report. </a>A continued economic recovery, accelerated vaccination campaigns and oil prices of about $65 a barrel this year will also support growth in sukuk issuance, the ratings agency said. A global economic recovery, fiscal and monetary easing, as well as liquidity injected by major governments and central banks globally are expected to drive the post-pandemic growth of Islamic finance assets, Alpen Capital and Alpen Asset Advisers said in June. A growing Muslim population, more sukuk issuances and ethical consumerism are set to boost demand for Sharia-compliant products, it said. There is a growing need to address the challenges that arise with the development of any financial instruments, Mr Al Hamad said. “These should be tackled by creating greater transparency and standardisation in financial documentation and practices.” Standardisation brings the required unification, efficiency and transparency needed for the advancement of the sukuk market, Ijlal Alvi, chief executive of the IIFM, said. “It is also important that the industry stakeholders provide support for continued innovation in the sukuk market particularly in the areas of Environment, Social & Governance (ESG) goals, FinTech and Waqf-focused sukuk,” Mr Alvi said. “These factors present a huge potential that will play a major role in the development of the sukuk market in years to come.” ESG-centred financial instruments will play a vital role in a sustainable and green post-Covid recovery, Zamir Iqbal, chief financial officer at Islamic Development Bank (IsDB), said. “This will offer attractive opportunities for sukuk issuers to cater to growing demand,” he added. The issuance of more debut sukuk and successful refinancing of maturing sukuk are among the indications that the strong demand for Islamic bond issuances will continue in 2021, the IIFM said. <br/> <br/> <br/>