What Will It Take to Increase Islamic Issuance?

Insights from Global Banking & Markets' first-ever Global Islamic Finance Summit, Dubai.

More than 400 delegates and 40+ speakers gathered in Dubai this June for GBM's inaugural Global Islamic Finance Summit — and issuers were candid about what it actually takes to make sukuk a repeatable part of their funding strategy, rather than a one-off diversification exercise.

The message was encouraging but grounded in practical reality: demand for sukuk is strong, and the product can deliver genuine investor diversification, resilient execution, and, in the right circumstances, a pricing advantage. But the biggest hurdles sit before the first transaction ever launches — establishing the legal framework, identifying eligible assets, building internal understanding, and being clear-eyed about what the instrument is actually meant to achieve.

Six themes emerged from the issuer discussions:

1. Start with the objective, not the format. Sukuk work best as one tool within a broader debt-management strategy — sitting alongside conventional bonds, loans and other currencies — rather than a goal in itself. Investor diversification was the most consistent driver, ahead of pure pricing benefit.

2. Treat debut infrastructure as an investment, not a cost. The legal groundwork, Sharia committee, asset-valuation process and SPV arrangements are largely one-time workstreams. Once built, later transactions become far more standardised — so the effort of a debut should be judged against a whole future programme, not a single deal.

3. Be ready before the market window opens. The issuers with the most flexibility keep several funding routes — conventional, sukuk, loan — documented and executable at once, then choose whichever offers the best execution when conditions align. Waiting to build the structure until the market turns attractive means missing the window entirely.

4. Plan the second transaction before launching the first. Repeat issuance keeps investor relationships active, builds a pricing curve, and proves the framework is a genuine programme rather than a one-time opportunistic structure. For sovereigns in particular, a debut establishes the law and the benchmark; repeat issuance is what actually opens the market to banks and corporates.

5. Local- and hard-currency sukuk do different jobs. A local-currency sukuk tends to be about developing the domestic market and building a local curve; a hard-currency sukuk is more often driven by international investor diversification. Pricing outcomes between the two can differ significantly — reflecting the cost of establishing a new instrument, not any inherent premium on Islamic issuance.

6. Commitment matters — and the market should demand less of it over time. One repeat issuer summed up the debut experience in two words: "be persistent." A first sukuk means working through unfamiliar regulatory, structural and asset questions almost daily. But the payoff can be substantial — one transaction discussed in Dubai came to market six times oversubscribed. The broader responsibility now sits with the market: clearer guidance, reusable documentation and better coordination between banks, advisers, scholars and regulators should make each subsequent debut easier than the last.

The takeaway: issuers weren't arguing that every borrower should choose sukuk for every transaction. Their message was simpler — more borrowers would use the Islamic format if the strategic case were clear, and if the debut process led somewhere reusable. The market grows not by persuading one issuer to complete a landmark transaction, but by making every transaction after it easier.

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