Bond CoCo Conversion Sukuk Islamic Down 2026
The global sukuk market has seen a notable shift in recent years, particularly with the emergence of convertible contingent bonds (CoCo) in Islamic finance. As of 2023, the estimated size of the global sukuk market reached approximately $600 billion, with a projected growth rate of 5.5% annually until 2026. The rise of CoCo sukuk has gained traction, particularly in Gulf Cooperation Council (GCC) countries, where the demand for Sharia-compliant financing continues to expand. However, challenges remain as market volatility and regulatory frameworks evolve, impacting the performance of these instruments.
1. Saudi Arabia
Saudi Arabia remains a leader in the sukuk market, with over $200 billion issued in 2022 alone. The Kingdom’s Vision 2030 initiative aims to diversify its economy, leading to a growing appetite for Islamic finance, including CoCo sukuk.
2. Malaysia
Malaysia is one of the largest sukuk issuers globally, accounting for approximately 50% of the global market. In 2022, the country issued sukuk worth $13 billion, with CoCo sukuk gaining popularity among investors seeking Sharia-compliant high yields.
3. United Arab Emirates (UAE)
The UAE’s sukuk market was valued at $70 billion in 2022. The Dubai government is actively promoting CoCo sukuk as a strategic funding tool, leveraging its position as a financial hub in the region.
4. Qatar
Qatar’s sukuk market has grown significantly, with a total issuance of $32 billion in 2022. The government has started exploring CoCo sukuk as a mechanism to boost its financial stability and support economic diversification.
5. Indonesia
Indonesia is emerging as a major player in the sukuk market, with an issuance of $10 billion in 2022. The country is integrating CoCo sukuk into its Islamic financing framework to attract foreign investment and enhance liquidity.
6. Turkey
Turkey issued approximately $4 billion in sukuk in 2022, with an increasing focus on CoCo sukuk to meet the needs of a growing investor base looking for Sharia-compliant options. The Turkish government aims to boost its Islamic finance sector significantly.
7. Bahrain
Bahrain’s sukuk issuance reached $5 billion in 2022. The Central Bank of Bahrain is encouraging the development of CoCo sukuk to strengthen the country’s financial resilience and diversify its funding sources.
8. Pakistan
Pakistan’s sukuk market is growing, with a total issuance of $3 billion in 2022. The potential for CoCo sukuk in the country is significant as the government seeks innovative financing solutions to address fiscal challenges.
9. Egypt
Egypt’s sukuk market is valued at approximately $2 billion, with the government exploring the issuance of CoCo sukuk to finance major infrastructure projects and attract international investment.
10. Oman
Oman’s sukuk issuance reached $1.5 billion in 2022. The government is considering CoCo sukuk as a way to enhance its financial stability in the face of fluctuating oil prices.
11. Kuwait
Kuwait’s sukuk market stood at around $6 billion in 2022. The Central Bank of Kuwait is examining the feasibility of issuing CoCo sukuk to support local banks and increase liquidity.
12. Jordan
Jordan’s sukuk issuance was modest at $1 billion in 2022. However, the country is looking to CoCo sukuk as a way to tap into new funding sources and enhance its Islamic finance offerings.
13. South Africa
South Africa’s sukuk market is valued at approximately $500 million. The government has expressed interest in developing CoCo sukuk to facilitate financing for renewable energy projects and infrastructure development.
14. Morocco
Morocco has recently entered the sukuk market with a focus on sustainable finance. The government is considering CoCo sukuk to attract green investments and support its economic growth.
15. Nigeria
Nigeria’s sukuk issuance was around $1 billion in 2022. The country is exploring the potential of CoCo sukuk to finance infrastructure projects and improve its Islamic finance landscape.
16. Singapore
Singapore’s sukuk market was valued at approximately $8 billion in 2022. The country is positioning itself as a global Islamic finance hub, with increasing interest in CoCo sukuk among institutional investors.
17. Brunei
Brunei’s sukuk market is relatively small but growing, with a total issuance of $500 million. The government is evaluating the potential for CoCo sukuk to diversify its funding sources and enhance financial stability.
18. Afghanistan
Afghanistan’s potential for sukuk issuance remains untapped, but discussions around CoCo sukuk are beginning as the government seeks innovative funding methods for reconstruction and development.
19. Bangladesh
Bangladesh’s sukuk market is still in its nascent stages, with an estimated issuance of $200 million. The government is keen to explore CoCo sukuk to attract foreign investments into its burgeoning economy.
20. Vietnam
Vietnam has not yet issued sukuk but is exploring the Islamic finance sector. As the country aims to attract investments, CoCo sukuk could provide a novel route for financing infrastructure projects.
Insights
The sukuk market, particularly the CoCo sukuk segment, is poised for significant growth as countries seek innovative financing solutions amid economic challenges. With the global sukuk market projected to reach $800 billion by 2026, issuers are increasingly turning to CoCo instruments to attract a diverse investor base. The demand for Sharia-compliant investments is expected to continue growing, especially in GCC countries, where regulatory frameworks are evolving to facilitate such instruments. By 2026, it’s anticipated that the CoCo sukuk segment could account for over 15% of total sukuk issuance, reflecting a substantial shift in investment trends.
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