Explainer: How is the ESG sukuk market faring?
We speak with Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings on sustainable issuances and its growth trajectory.
Sustainable or green issuances through sukuk across Gulf countries are higher compared to bonds. What is the primary reason for that?
Commonalities exist between Islamic finance and ESG principles due to built-in Shari’a filters.
In the GCC region, 40% of hard-currency ESG debt mix is in sukuk format, with the rest in bonds. The key reason why the sukuk format is prevalent in the regional ESG debt mix is to attract the larger Islamic investor base, mainly Islamic banks, that have a robust appetite for sukuk and can only invest in Sharia-compliant securities, along with tapping the international investor appetite for ESG products.
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