<a href="https://www.thenationalnews.com/business/banking/2022/07/05/global-sukuk-volumes-set-to-slide-in-2022-amid-rising-rates-and-expensive-liquidity-sp/" target="_blank">Global sukuk </a>or Islamic bond issuance is projected to grow at a compound annual growth rate of 6.8 per cent over the next five years, despite declining this year due to a global monetary tightening cycle, according to a new report by Refinitiv. Sukuk issuance is projected to reach $257 billion in 2027, with nearly 41 per cent of respondents in a Refinitiv survey saying they were still bullish about growth in sukuk supply. However, volumes are set to decline 6 per cent this year to $185bn from $196.5bn last year, the report found. Global<a href="https://www.thenationalnews.com/business/economy/2022/02/23/global-long-term-sukuk-issuance-reached-88bn-in-2021-moodys-says/" target="_blank"> sukuk</a> issuance reached $100.9bn in the first half of the year, marginally lower than $104.2bn in the same period last year. The momentum of international sukuk issuance started to slow in the January-June period, despite strong activity from issuers capitalising on high demand from international investors early in the year, Refinitiv said. “Despite a strong start to the year, issuance momentum slowed … the surge in oil prices also contributed to the slowdown in issuance, as it reduced government borrowing needs in core sukuk markets,” said Mustafa Adil, head of Islamic finance at Refinitiv. “Dollar sukuk issuance amounted to $22bn in H1 2022 [down from $33.2bn in H1 2021], as issuers concentrated their borrowing in domestic markets and the Fed’s tightening policy strengthened the dollar." The <a href="https://www.thenationalnews.com/business/2022/06/15/us-fed-ponders-huge-rate-increase-to-battle-record-inflation/" target="_blank">US Federal Reserve</a>, which kept rates near zero during the coronavirus pandemic, increased the policy rate by 75 basis points (bps) in July after a larger-than-expected three quarters percentage point in June. It was the Fed's fourth interest rate increase in four months and the biggest since 1994. The US central bank has also indicated that it will continue with its monetary tightening policy as it seeks to bring inflation under control. Several other central banks have also raised interest rates to curb soaring consumer prices. "As geopolitical tensions heightened and multiple rate hikes loomed, conventional bond issuances slowed and analysts projected a parallel effect on sukuk issuance," the report said. "However, continued robust demand for sukuk and increasing budgetary pressures on emerging economies such as Malaysia, Indonesia and Pakistan have buoyed global issuance so far in 2022. Mid-year issuances have passed $100bn, reducing the likelihood of a significant drop over the full year," it said. Malaysia, Saudi Arabia and Indonesia remained the largest issuance bases for sukuk, and together accounted for 75 per cent of sukuk issued last year and in the first half of 2022, Refinitiv found. In Saudi Arabia, Islamic bond issuances reached $28.1bn in the first half of 2022, compared with $24.2bn during the same period last year.