Sukuk Illiquidity in Secondary Trading
June 08, 2022 | Updated at June 08, 2022
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Some Sukuk are not the most liquid papers out on the secondary market. The not ‘trading hands much’ state is due to most investors (MENA-based) following the ‘buy and hold’ strategy.
Illiquidity for listed security is a problem for issuers who plan to tap the market on a regular basis. This issue has become apparent with international listings where few trades are executed. We see this issue with a deal size of less than USD 400 million.
To tackle the issue of illiquidity, which will affect the pricing of future issuances, it is recommended to aim for benchmark-sized Sukuk issuances (normally understood to mean at least USD 500 million in size). Ideally, limiting the size of issuances to USD 500 million will ensure...
