Introduction
The global Sukuk market has experienced significant growth over the past decade, driven by increasing demand for Sharia-compliant financial instruments. As of 2023, the global Sukuk market was valued at approximately $620 billion, with Tier 2 subordinated Sukuk representing a substantial portion due to their attractiveness for capital-raising among Islamic banks. The market for Tier 2 Subordinated Sukuk is expected to expand further, with estimates suggesting an annual growth rate of around 10% through 2026 as banks seek to bolster their capital ratios in compliance with Basel III requirements.
Top 20 Bond Tier 2 Subordinated Sukuk Islamic Bank Capital 2026
1. Dubai Islamic Bank
Dubai Islamic Bank is one of the largest Islamic banks in the UAE, with a market capitalization of approximately $10 billion. Its Tier 2 Sukuk issuance in 2021 raised $1.25 billion, aimed at enhancing its capital base and supporting future growth.
2. Abu Dhabi Islamic Bank
Abu Dhabi Islamic Bank has a market share of about 6% in the UAE banking sector. The bank issued a $500 million Tier 2 Sukuk in 2022 to strengthen its capital ratios while supporting its expansion in retail banking services.
3. Qatar Islamic Bank
Qatar Islamic Bank has a market capitalization of around $7.5 billion. It issued a $1 billion Tier 2 Sukuk in 2020, which was oversubscribed by more than 100%, reflecting strong investor confidence and demand in the Islamic finance sector.
4. Al Baraka Banking Group
Al Baraka Banking Group, with a regional presence in several countries, issued a $500 million Tier 2 Sukuk in 2021. The bonds were aimed at improving its capital structure and expanding its financing capabilities.
5. Kuwait Finance House
Kuwait Finance House has a market share of approximately 9% in the Kuwaiti banking sector. Its recent Tier 2 Sukuk issuance of $750 million in 2022 is part of its strategy to meet Basel III requirements and enhance its capital adequacy.
6. Bank Al Jazira
Bank Al Jazira, based in Saudi Arabia, issued a $500 million Tier 2 Sukuk in 2021, aimed at supporting its growth strategy and improving its capital ratios. The issuance was well received, highlighting investor appetite for Sharia-compliant assets.
7. Maybank Islamic Berhad
Maybank Islamic, Malaysia’s largest Islamic bank, issued a Tier 2 Sukuk worth $1 billion in 2022. The funds raised are intended for general banking purposes and to strengthen the bank’s capital base amidst growing regulatory requirements.
8. CIMB Islamic Bank
CIMB Islamic Bank is a leading player in Malaysia’s Islamic finance market, holding a market share of approximately 15%. Its $750 million Tier 2 Sukuk issued in 2021 serves to enhance its Tier 2 capital under Basel III guidelines.
9. Bank Muamalat Malaysia Berhad
Bank Muamalat has a significant presence in the Malaysian Islamic banking sector. Its issuance of a $250 million Tier 2 Sukuk in 2021 was part of a strategic plan to bolster its capital ratios and support growth initiatives.
10. Al Hilal Bank
Al Hilal Bank issued a $500 million Tier 2 Sukuk in 2021, aimed at enhancing its financial stability and supporting expansion plans within the UAE market. The issuance attracted a diverse range of international investors.
11. Abu Dhabi Commercial Bank
Abu Dhabi Commercial Bank, a major player in the UAE financial landscape, issued a $1 billion Tier 2 Sukuk in 2022. This issuance is part of its strategy to optimize its capital structure in alignment with Basel III requirements.
12. Qatar National Bank
Qatar National Bank is the largest financial institution in the Middle East, with a market capitalization of approximately $50 billion. Its $1.5 billion Tier 2 Sukuk issued in 2020 was well-received, showcasing strong demand for Islamic banking instruments.
13. Dubai Investments Bank
Dubai Investments Bank issued a $300 million Tier 2 Sukuk in 2021. This issuance was part of its ongoing efforts to strengthen its capital base and support its diversified investment portfolio.
14. Bank of Khartoum
Bank of Khartoum, Sudan’s largest bank, issued a Tier 2 Sukuk worth $200 million in 2021. The Sukuk aimed to enhance its capital adequacy and support the bank’s expansion plans in the region.
15. Al Rajhi Bank
Al Rajhi Bank is one of the largest Islamic banks in Saudi Arabia, with a market capitalization of around $27 billion. Its Tier 2 Sukuk issuance of $1 billion in 2021 was part of its strategy to support growth while meeting regulatory capital needs.
16. Emirates Islamic Bank
Emirates Islamic Bank issued a $500 million Tier 2 Sukuk in 2022, enhancing its capital base amidst a growing demand for Islamic banking products. The issuance drew significant interest from international investors.
17. First Abu Dhabi Bank
First Abu Dhabi Bank, the largest bank in the UAE by assets, issued a $1.25 billion Tier 2 Sukuk in 2021. The funds raised are intended for general corporate purposes and to strengthen its capital position.
18. Al Ahli Bank of Kuwait
Al Ahli Bank of Kuwait issued a $300 million Tier 2 Sukuk in 2022, aimed at enhancing its Tier 2 capital and supporting its overall growth strategy in the competitive banking landscape.
19. Bank Albilad
Bank Albilad, a Saudi Arabian Islamic bank, issued a $400 million Tier 2 Sukuk in 2021. This issuance was part of its strategy to diversify funding sources and improve capital ratios.
20. Qatar Islamic Insurance Company
Qatar Islamic Insurance Company issued a $150 million Tier 2 Sukuk in 2022, aimed at bolstering its capital base and supporting its insurance operations in compliance with regulatory requirements.
Insights
The Tier 2 Subordinated Sukuk market is poised for continued growth in the coming years, driven by regulatory requirements and the increasing appetite for Sharia-compliant financial instruments. As banks across the Middle East and Southeast Asia seek to strengthen their capital bases, the Sukuk market provides a viable alternative to traditional debt instruments. The total issuance of Sukuk is projected to reach around $700 billion by 2026, representing a compound annual growth rate (CAGR) of approximately 8%. As more institutions embrace Islamic finance, the market is likely to attract a broader investor base, further enhancing liquidity and growth potential in this sector.
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