Malaysia’s sukuk market the largest in the world

By Tamimi Omar

The Malaysian sukuk market is now the largest Islamic bond market in the world with more than 62% or US$60 billion (RM195.6 billion) of the global outstanding sukuk having been originated in the country, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said.

“Supported by a comprehensive infrastructure, including the settlement and bond information system, Malaysia has an attractive primary sukuk market with an average annual growth of 17% over the 2001-2006 period.

“It also has one of the most active secondary markets with a turnover of sukuk trading registering more than US$40 billion annually,” Zeti said in her keynote speech on "The Evolution and Opportunities of Islamic Finance" at the Nikkei Islamic Finance Symposium in Tokyo last Saturday.

She said the Malaysian bond market had been liberalised to enable foreign entities to raise ringgit and foreign currency denominated funds. "International issuers may thus issue multi-currency sukuks or alternatively have the flexibility to swap domestic currency funding into other currencies."

Zeti also announced that a Malaysian corporation recently issued the world's largest-ever sukuk amounting to US$4.7 billion, which was two times oversubscribed.

Globally, she said the total Islamic finance assets had surpassed the US$1 trillion mark, growing fivefold in five years and the global Islamic financial market was expanding at an annual growth of 20%.

Zeti said the increased diversity in Islamic financial products, including sukuk bonds, had made them more attractive as investment subjects.

She said global sukuk market had registered a remarkable growth, increasing at an average of 40% with a current size of US$80 billion.