The Middle East and North Africa (MENA) region recorded strong growth in the sukuk market in the first 10 months of 2015. The market value, as tracked by the S&P MENA Sukuk Index, rose 14% YTD to 37 billion, compared with the mere 1% growth in the conventional bond market in the region. The sukuk market has expanded 37% since the S&P MENA Sukuk Index’s inception in July 2013. United Arab Emirates is the most active issuing country in the region, and it remains dominant in terms of country exposure at 52%, followed by Saudi Arabia at 17%.
Overall, governments have continued to diversify their funding platforms, and the global sukuk market has witnessed solid support from the lack of primary supply.
Looking at the indices’ total return performance, there has been a 1.1%-1.3% decline in both sukuk and bond markets month-to-date. As of Nov 18, 2015, the S&P MENA Sukuk Index rose 1.05% YTD, while the S&P MENA Bond Index outperformed and gained 1.90% in the same period.
Exhibit 1: Total Return Performance