UK and Malaysia Dominated Sukuk Market in 2014 as Halal Money turned Kosher

Malaysia through its government and corporates remained the single most populace Sukuk issuer in 2014, whilst British banks and legal firms continued to dominate the arrangers market.

New Debuts



Traditional Sukuk issuance bases of South East Asia and the Gulf were joined in 2014 by Europe, Africa and East Asia as Sukuk went global.

True demand however remains solidly rooted in South East Asia and the Gulf as amongst the debut issuers of United Kingdom, Luxembourg and Hong Kong the motivation was driven by laying foundations and setting their credentials as destinations for the growing Islamic Finance market than any need to diversify their investor base. Only South Africa and Senegal were driven by the need to fund real infrastructure projects.

Halal Money into Kosher

International financial institutions jumped onto the bandwagon too with Goldman Sachs raising $500 million in its debut Sukuk in September. Motivation for the issue was likely unfinished business from its aborted issue in 2012 and time will tell if turning Halal money Kosher with the unfortunate blessing of a number of prominent scholars is a wise move or a Trojan Horse into the Sukuk market, the secondary market performance points to the latter.

Malaysia Leads Issuance Market

In June, Bank of Tokyo-Mitsubishi UFJ became the first Japanese bank to issue Sukuk, selling both yen- and dollar-denominated instruments through its Malaysian unit.

Malaysia, which pioneered Islamic finance three decades ago, remains the world’s biggest sukuk market. Ringgit-denominated Sukuk continue to be mainly sold to domestic investors.

UK Banks and Law Firms Continue to Dominate Sukuk Market

The UK’s success in the Islamic Finance market was not Her Majesty’s Treasury debut Sukuk, which whilst a success, rather the continued dominance of British power house banks of HSBC and Standard Chartered who dominated the arrangers market, between them carving up most of the market outside of Malaysia in a trend likely to continue into 2015 and beyond.

The continued dominance of English law in Sukuk allowed the City’s leading law firms through their London or regional offices to lead the way in the legal sector with the likes of Allen & Overy, Dentons, Linklaters, Slaughter and May, King and Spalding, and Clifford Chance advising on a number of Sukuk deals.

Letting the team down was the London Stock Exchange, as issuers preferred technical listings on the Irish Stock Exchange and Nasdaq Dubai rather than listing on the London Stock Exchange and accessing its deep liquidity pools which currently seem not of relevance to issuers as primary subscriptions continue to exceed supply.