RIYADH: Global sukuk outstanding reached $900 billion by the third quarter of the year, marking an 8.5 percent year-on-year increase, driven by improved financing conditions after the US Fed rate cut, according to Fitch Ratings. 

The US Federal Reserve’s recent decision to lower rates to 5 percent in September is expected to lead to further declines, with Fitch projecting rates of 4.5 percent and 3.5 percent by the end of 2024 and 2025, respectively. This environment is anticipated to stimulate sukuk issuances in the near term. 

The analysis said that several factors, including the refinancing of upcoming maturities and the funding and diversification goals of Islamic countries, will drive the growth of sukuk issuances in the fourth quarter of this year and into 2025. 

Sukuk, which is also called an Islamic bond, is a Shariah-compliant debt product, through which investors gain partial ownership of an issuer’s assets until maturity. 

The analysis from Fitch follows Saudi energy giant Aramco’s recent completion of a $3 billion international sukuk issuance, with demand exceeding expectations and reaching six times oversubscription. 

“We are seeing a build-up of sukuk pipeline partially supported by the recent Fed cut. However, downside risks include shariah-related complexities, rising geopolitical risks, and oil volatilities that could affect market growth,” said Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings. 

He added: “In general, sukuk market credit conditions are sound, with 81.5 percent of Fitch-rated sukuk being investment-grade, 95 percent of sukuk issuers on Stable Outlooks, and no defaults.” 

In the Gulf Cooperation Council region, the debt capital market is about $1 trillion outstanding, with sukuk accounting for 37 percent. 

According to the analysis, international demand for emerging market US dollar debt issuance is likely to rise, with sukuk comprising more than 10 percent. 

The report also said that the sukuk market has become more diverse following the inaugural sukuk issuance by Ireland-based AerCap Holdings and Kuwait’s first sustainable sukuk from Warba Bank. 

In August, another report released by Fitch Ratings said that the UK is a Western hub for Islamic finance, with the London Stock Exchange being the third-largest listing venue for US dollar sukuk globally. 

According to that report, the LSE currently holds a 35 percent global share of US dollar sukuk, valued at around $80 billion outstanding at the end of the first half of this year. 

RIYADH: Saudi Arabia’s point-of-sale transactions climbed 2.6 percent to SR13.7 billion ($3.6 billion) in the week ending Oct. 5, driven by a sharp increase in spending within the education sector, official data showed. 

The latest figures from the Saudi Central Bank, also known as SAMA, showed that the education sector led the growth with a 96.8 percent surge in transactions, totaling SR196.8 million, following weeks of declines since the academic year started in August. 

Telecommunication spending followed, rising 17.4 percent to SR136.5 million. The public utilities sector recorded the third-largest increase, with a 13.9 percent jump to SR61.5 million. 

Expenditure on furniture saw the largest decline, dropping 11.7 percent to SR349.3 million during this period. 

Spending on electronic devices fell 8.4 percent to SR238 million, while clothing and footwear saw a 7.4 percent decrease to SR757.3 million. Recreation and restaurant expenditures also declined by 2.4 percent and 1.9 percent, respectively. 

These five sectors were the only ones to register declines, while the majority of industries experienced growth. 

In terms of transaction value, the food and beverages sector retained the largest share of POS spending, totaling SR2.22 billion, followed by restaurants and cafes at SR1.95 billion, and miscellaneous goods and services at SR1.77 billion. 

Spending in these top three categories accounted for approximately 43.3 percent, or SR5.9 billion, of the week’s total POS value. 

Geographically, Riyadh led POS transactions, representing 34.3 percent of the total, with spending in the capital reaching SR4.71 billion, the second-highest increase at 4.7 percent. 

Jeddah followed with a 2.2 percent rise to SR1.86 billion, accounting for 13.6 percent of the total. Dammam ranked third with SR697 million, recording the highest increase at 5.8 percent. 

Tabuk saw the third-largest spending increase, up 4.2 percent to SR276.2 million. Hail and Abha also experienced growth, with expenditures rising 1.7 percent and 0.5 percent to SR224.6 million and SR168.6 million, respectively. 

In terms of the number of transactions, Dammam saw the highest increase at 6.8 percent, reaching 9,112 transactions. Hail and Buraidah recorded the smallest increases at 2.9 percent each, with 4,046 and 4,964 transactions, respectively.