Global sukuk issuance looks ‘uncertain’ for 2018, says S&P Global

The outlook for Islamic bonds remains 'uncertain' for the coming year, according to ratings agency S&P Global. (Reuters)
Updated 09 January 2018
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Global sukuk issuance looks ‘uncertain’ for 2018, says S&P Global

LONDON: While 2017 was a bumper year for global sukuk issuance, the outlook for Islamic bonds remains "uncertain" for the coming year, according to ratings agency S&P Global.
Global sukuk issuance in 2017 reached $97.9 billion, an increase of 45.3 percent, from the $67.4 billion recorded in 2016. The increase was underpinned by large issuances by GCC countries, particularly the $9 billion sukuk issued by Saudi Arabia in April. This remains the largest issuance globally to date.

"Driving this performance were good liquidity conditions in the GCC and, more generally, globally, as well as activity by some countries with the goal of further developing their Islamic finance industries," said Dr Mohamed Damak, head of Islamic finance, at the ratings agency.
Non-GCC countries also contributed to the rise, said S&P Global, with Hong Kong tapping the market again last year and Nigeria issuing its first sukuk. Morocco and Tunisia are expected to issue sukuks this year, according to the report.
The report said while core Islamic finance countries will continue to have “significant” financing needs in 2018, the sukuk market could be held back by tightening global liquidity and rising geopolitical risks in the Middle East.
The report cited sanctions imposed on Qatar by a group of Arab states in June 2017, as well as continued animosity between Iran and GCC countries as factors that may undermine investor interest in the product.
It also suggested that the “slow progress” on standardizing Islamic finance products will limit the market’s potential. S&P Global expects issuance volumes to hover nearer $70-80 billion in 2018, according to the report.


France unveils major tax cuts as growth flags

Updated 38 min ago
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France unveils major tax cuts as growth flags

  • Critics say most people have been left behind by President Emmanuel Macron’s policies so far
  • Patience is wearing thin for many as unemployment has barely budged since Macron’s election in May 2017

PARIS: The French government on Monday unveiled billions of euros in tax relief for businesses alongside further budget cuts, as President Emmanuel Macron struggles to deliver more jobs and higher growth as promised.
The former investment banker’s poll ratings have dived in recent weeks as growth has slowed despite a series of reforms presented as unavoidable shock treatment for getting France on solid financial footing.
Critics say most people have been left behind by Macron’s policies so far, which have seen him raise taxes on retirees while cutting a wealth tax on top earners.
Pensions and welfare benefits will be shaved further in the 2019 budget — Macron complained in June that France spends “a crazy amount of dough” on social programs.
And 4,100 more public sector jobs will be axed as Macron aims for a deficit of 2.8 percent of GDP, below the 3 percent limit set for EU members.
Higher taxes on fuel and cigarettes will also hit consumers next year.
But the government says the pillar of the 2019 budget will be a combined €20 billion ($23.5 billion) of tax cuts for businesses and six billion euros in tax relief for households, including a gradual end to an annual housing tax.
“The long-term goal is to build a new French prosperity that will benefit all French people in all regions,” Finance Minister Bruno Le Maire said as he presented the budget in Paris.
But he acknowledged that results from Macron’s reform drive so far “are unsatisfactory compared with our European neighbors, and we certainly don’t intend to stop here.”
“We’re doing less well than our European partners on unemployment, growth, the deficit and debt,” Le Maire said.
Patience is wearing thin for many as unemployment has barely budged since Macron’s election in May 2017, standing at 9.1 percent.
The 40-year-old centrist captured the presidency with a pledge to shake up an economy he says is held back by excessive regulations and rigid labor laws.
But growth has been slowing and is now widely expected to reach just 1.6 percent this year, and the government is forecasting an uptick to just 1.7 percent next year.
A poll released Sunday found just 29 percent satisfied with Macron’s leadership, while a separate survey last week said only 19 percent of French people held a positive view of his record.
He has promised to balance the budget in France for the first time in more than 40 years by the end of his term in 2022 — a task that will require an overhaul of state spending.
That has led him to take on France’s powerful labor unions to a degree not seen in decades, overcoming stiff resistance to new laws making it easier to fire people and ending the privileged status of rail workers.
He has also promised to cut 120,000 public sector jobs by the end of his term in 2022, a daunting prospect in a country known for its expansive bureaucracy which guarantees civil servants jobs for life.
Yet Macron has appeared to be dismissive of the concerns of everyday voters, most recently telling an unemployed gardener to go get a job in a restaurant or construction instead.
His reformist zeal has also exposed him to criticism that his policies favor businesses in particular, and he has struggled to shake off perceptions that he is “president of the rich.”
The vow to cut social spending is unlikely to reassure the lowest earners in France, where the number of people living below the poverty line has swelled to 14 percent of the population, according to national statistics office INSEE.