Falling oil prices are unlikely to spur Gulf sovereign Sukuk issuance in 2015

Upside for sovereign Sukuk issuance in countries in the Gulf Cooperation Council is limited in 2015, in Standard & Poor's Ratings Services' opinion. The rating agency expects that lower oil prices will lead to fiscal deficits in some countries in the GCC, but nonetheless most governments' net asset positions will likely remain strong enough to enable their financing. Most sovereign Sukuk issues will relate to essential infrastructure projects and refinancing needs. Government-related entities' (GREs) financing activity, the availability of large government assets, and healthy liquidity in the banking sector all limit the linkage between changes in oil prices and the potential for sovereign Sukuk issuance, according to S&P.