The sukuk market has the potential to grow considerably in the near to medium term as key Islamic capital markets develop.

Four key areas need to be harnessed to fast-track corporates as a significant player in the sukuk and the debt capital markets, namely:

  1. Cost and time optimisation
  2. Incentives
  3. De-sophistication and standardisation
  4. Education

Shifting corporate funding in the Gulf Cooperation Council (GCC) region from bank loans to sukuk and bonds is seen as more costly and time consuming. Banks in region are also primarily funded by deposits from customers and governments rather than capital markets, and we do not expect this to change significantly in in the short to medium term. This is because many potential issuers see the economics for…


Takaful (Islamic insurance) is one of the pillars of Islamic finance markets but its growth requires further impetus. Takaful accounted for USD46 billion of global Islamic finance assets in 2017, up by 4.5% from 2016*.

More than 45 countries have takaful operators or takaful windows (which enable insurers to offer sharia-compliant and conventional products side by side), totaling 324 entities. However, takaful continues to only represent 2% of total global Islamic finance industry assets.

Takaful, which translates to “solidarity” in Arabic, is a form of Islamic insurance whereby participants agree to contribute a sum of money as a donation into a common fund that is subsequently used for mutual assistance of its members against specified losses or damages.

Takaful companies, like other Islamic finance companies, face a variety of challenges that vary from one country…


Sukuk issuance by corporates in 2018 in key Islamic finance markets, such as the Gulf Cooperation Council (GCC) region, Indonesia, Turkey and Pakistan, has been small relative to its potential.

The only exception is Malaysia, which has a relatively developed local sukuk market (at USD116 billion of local corporate sukuk issuance).

The return to debt issuance in 2018 by many governments (although not at the same level of 2017) could help encourage growth in the private sector’s sukuk market. This, along with the efforts to establish a basic sukuk market ecosystem and enhance infrastructure and processes for corporate debt issuance, could also make sukuk more attractive for corporate and financial institution (FI) issuers.

Banks continue to be the primary source of funding for corporates in the GCC due to a…


The UK has carved out a pivotal role in growing it’s footprint in Islamic finance over the past several years.

Islamic finance, which is systemically important in many jurisdictions including the Gulf Cooperation Council (GCC) and Malaysia, is now growing throughout the Middle East, Asia and Africa. Islamic finance has also expanded its global footprint to the United Kingdom, Luxembourg and Hong Kong in recent years largely through the issuance of sukuk.

London is a financial hub where Islamic banks access international markets

The UK in particular has carved out a pivotal role in growing it’s footprint in Islamic finance over the past several years. With Brexit having no discernible impact on either the market’s expansion or its central role the UK’s position in international Islamic finance industry will continue to…


Canada has helped to establish a template for other sovereigns in embracing alternative and socially conscious forms of investing. A recent notable example of Canada’s proactive push in this area is Islamic Finance.

What will it take to attract Canada’s policy makers and conventional players to Islamic Finance?

The overarching reason is that Canada can deepen its pool of investors; the belief being that the more people have a personal stake in an investment, the more public acceptance it will generate. The reality, however, is that belief is still very much a desired outcome instead of what’s actually taking place today.

A recent acquisition by Toronto-based roboadviser Wealthsimple Financial underscores a slowly-warming appetite towards Islamic finance in Canada. The primary impetus behind Wealthsimple’s purchase of a shariah-compliant portfolio a couple of months ago appears to be to target both Canadian and US investors. …


Created to fund projects with positive environmental benefits, green bonds have become rapidly popular in Europe and Asia while gaining traction in the United States.

Islamic finance is one of the latest sectors to begin exploring the possibilities of what has been called “socially responsible” investing.

With Islamic finance systemically important in many jurisdictions and now growing in the wider regions of Middle East, Asia and Africa, recent discussion is focused on the favourable prospects of green sukuk being another growth driver for Islamic finance.

According to Reuters, a record $32.2 billion-worth of green bonds were issued in the second quarter of 2017. While issuance from emerging markets has jumped from $2.3 billion to $9.2 billion year-on-year (about half the total from developed markets) versus…


Whether you call it Fintech, Insure-tech or Takaful-tech, Fintech has become a buzzword in the Islamic finance industry.

Though not a sudden development, the evolution of Fintech in the industry has evolved rather rapidly.

Much has been made of the potential of Fintech in Islamic finance

Innovation is a cornerstone in the development of Islamic finance itself. As such, the general consensus among market participants is that Fintech has the potential to play a major role in the Islamic finance industry primarily to improve processes and cost effectiveness while maintaining Sharia compliance.

Fintech is necessary for Islamic finance to maintain and grow its market share as failure to keep pace with such developments could impact the competitiveness of its players. …

Bashar Al Natoor

Global Head of Islamic Finance at Fitch Ratings

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