Cheaper sukuk create opportunities for sovereign issuers
Both Egypt and Turkey have recently been able to tap dollars more cheaply through sukuk.
The high demand for and low supply of sukuk has led to good deals for issuers willing to tap the market, in a trend that is expected to continue for some time. So far this year, sukuk issuers have included Egypt, Dubai Islamic Bank, First Abu Dhabi Bank and Emirates Islamic.
Egypt made the most of the opportunity with a three-year $1.5 billion debut sukuk at the end of February. The sovereign, which has not issued a conventional bond since 2021, priced its sukuk to yield 11%.
While that might have looked high at first glance, it was inside the curve of Egypt’s 2026 conventional bonds, which were yielding 11.5% at the time. Investors flocked to the deal, and it was deemed a great success.
“We didn't struggle at all when it comes to investor appetite,” says Widad Gassab at Crédit Agricole, one of the lead banks on the trade.
We expect scarcity to continue, and therefore it gives opportunity for issuers that want to tap the sukuk market
And Egypt’s deal was no one-off.