Sukuk have emerged as one of the fastest-growing and most in-demand instruments in Islamic finance worldwide. Governments, corporations, and various organizations use sukuk to raise capital under Shariah-compliant structures that avoid riba (interest) and support genuine economic activity. As a result, the issuers of sukuk in the global market are remarkably diverse—ranging from major Gulf-based state-run entities to international conglomerates and governments outside the Muslim world.

This article examines who issues sukuk, why this Islamic finance tool is so attractive, and which trends are shaping its global future.

1. Brief Overview of Sukuk

1.1. What Is Sukuk?

Sukuk are Islamic certificates representing ownership in real, tangible assets or projects. Investors’ returns hinge on the performance of those assets (rental income, partnership profits, etc.), circumventing the conventional notion of interest. By adhering to Shariah principles, sukuk remain free of un-Islamic elements like riba, gharar, and maysir.

1.2. Advantages of Sukuk

• Shariah Compliance: Accesses funds from ethically driven and Muslim-majority investors.
• Real Economic Impact: Sukuk typically back real-world activities—such as infrastructure—benefiting economic development.
• Portfolio Diversification: Offers an alternative to traditional financial assets, appealing to a broader investor base.

2. Who Issues Sukuk in the Global Market

2.1. Governments and Sovereign Bodies

Sovereign issuers hold a leading position in the sukuk market. Muslim-majority countries (Saudi Arabia, UAE, Malaysia, Indonesia) frequently issue sovereign sukuk to finance infrastructure or cover fiscal deficits.

• Strengths: Lower default risk due to government backing; strong investor appetite.
• Examples: Indonesia issues sukuk for road construction and power generation; Saudi Arabia channels funds into large-scale energy projects.

2.2. Quasi-Governmental Entities

Government-linked organizations (state-owned or partially state-owned) also play a vital role in sukuk issuance, especially in the GCC region.

• Characteristic: Partial state guarantees can boost the credit profile, attracting wide investor interest.
• Example: Major oil and gas firms in the UAE or energy corporations in Qatar and Bahrain.

2.3. Private Corporations

Many private-sector companies across diverse industries—real estate, commerce, manufacturing—leverage sukuk to tap international capital markets.

• Geography: Beyond Muslim-majority countries, corporations in the UK, Luxembourg, Hong Kong, and elsewhere issue sukuk.
• Motivation: Access to Shariah-focused capital and alternative sources of funding.

2.4. International Financial Institutions

Banks and financial agencies may issue sukuk to refinance projects or to offer Shariah-compliant investment opportunities to clients.

• Example: The Islamic Development Bank (IsDB) frequently launches sukuk for socioeconomic development within OIC (Organization of Islamic Cooperation) nations.

2.5. Non-Traditional Issuers

In recent years, non-traditional players have entered the sukuk space:

• Non-Muslim Governments: The UK and South Africa have released sovereign sukuk to open doors to Islamic capital.
• Companies Outside Islamic Regions: European, African, or Asian firms with minimal historical ties to Islamic finance but seeking capital diversification.

3. Why Do Various Issuers Choose Sukuk?

3.1. Broad Access to Capital

Sukuk gives issuers a shot at funds from both Muslim-majority and global investors drawn to transparent, tangible asset-backed finance.

3.2. Socio-Religious Dimension

For Muslim-majority governments, sukuk issuance aligns with national identity and religious ethos, reinforcing the Islamic economy.

3.3. Flexible Structures

Sukuk can be structured under ijarah, musharakah, mudarabah, or other Shariah-based contracts, offering adaptability for multiple project types or sectors.

3.4. Regulator Support

Countries like Malaysia or the UAE provide tax and legal incentives to streamline sukuk issuance, fostering a more attractive environment for potential issuers.

4. Global Trends and Outlook

4.1. Rise of “Green” and ESG Sukuk

Driven by global sustainability goals, more issuers are launching “green sukuk,” directing capital to environmental or socially conscious projects.

• Example: Malaysia and Indonesia have sold green sukuk for solar energy infrastructure.

4.2. Digitization and Fintech

Financial technology, including blockchain and tokenization, promises cost savings and operational efficiencies in sukuk issuance.

• Pilot Projects: Several Gulf banks and institutions in Bahrain are experimenting with tokenized sukuk.

4.3. Geographic Expansion

Non-Muslim regions in Europe, Africa, and Asia increasingly see sukuk as a way to tap new investor pools.

• Result: A more heterogeneous issuer base, from African sovereigns to Eastern European real estate developers.

4.4. Growing Liquidity

Major exchanges such as NASDAQ Dubai, the London Stock Exchange, and the Luxembourg Stock Exchange list sukuk, boosting visibility and secondary market liquidity.

5. Benefits for Issuers and Investors

5.1. Issuer Advantages

• Global Investor Pool: Shariah compliance appeals to a broad array of funds and private investors.
• Flexible Payment Structures: Profit-sharing or lease-based returns, depending on the project.
• Reputational Gains: Reinforces corporate social responsibility and fosters trust among investors.

5.2. Investor Advantages

• Faith-Based Compliance: Essential for Muslim investors, yet also popular among ethical-minded funds.
• Asset-Backed Security: Generally considered more transparent due to tangible backing and real economic assets.
• Portfolio Diversification: Helps reduce overall volatility in investor portfolios.

6. Potential Hurdles and Risks

6.1. Legal Complexities

Not all jurisdictions have clear laws on sukuk. Issuers may face higher setup costs and complexities in drafting Shariah-compliant structures.

6.2. Shariah Interpretation Variances

Differences across Islamic legal schools (madhhabs) can complicate cross-border offerings and require specialized Shariah advice.

6.3. Structuring Complexity

Sukuk deals often require more extensive documentation than conventional financing, raising issuance costs.

6.4. Limited Liquidity in Some Markets

Despite global growth, local markets may struggle with minimal trading activity, influencing investor willingness to participate.

7. Examples of Key Issuers

7.1. GCC States

• Saudi Arabia: Sovereign sukuk and large-scale issues by national oil and gas companies.
• UAE: Quasi-governmental real estate and aviation entities issuing sukuk to fund infrastructure expansion.

7.2. Malaysia

Widely regarded as a pioneer, Malaysia regularly accounts for a significant share of global sukuk issuance through both governmental and private channels.

7.3. Indonesia

Using both sovereign and corporate sukuk, Indonesia finances infrastructure development and various socioeconomic programs.

7.4. The UK

Became the first European nation to release sovereign sukuk (2014), establishing a footprint for Islamic finance in Western markets.

8. The Future of Sukuk and the Role of Issuers

8.1. Expanding Shariah Standards

Efforts by AAOIFI and the Islamic Financial Services Board (IFSB) facilitate standardization, easing issuance for both emerging and established markets.

8.2. Rising Demand for “Responsible” Instruments

As global investors increasingly focus on ESG mandates, sukuk’s emphasis on ethical operations and tangible assets bolsters its appeal.

8.3. Fintech and Digital Platforms

Blockchain-based issuance and smart contracts can simplify sukuk management, reduce fees, and expand investor reach.

8.4. Geopolitical Factors

In some cases, sukuk provides an alternative financing avenue for governments looking beyond traditional Western capital channels, diversifying their funding sources.

9. Conclusion

The issuers of sukuk in the global market are incredibly varied—ranging from governments in Muslim-majority nations to multinational corporations and “non-traditional” sovereigns seeking Islamic capital. Sukuk’s fundamental Shariah compliance, real-asset backing, and international demand make it a favored choice for investors seeking transparency and ethical alignment.

Given the ongoing expansion of Islamic finance, coupled with innovation in areas like “green” sukuk and blockchain, it is likely that the roster of sukuk issuers will continue to grow. This diversification of participants underscores sukuk’s adaptability and underscores its potential to play a substantial role in shaping the future of responsible, asset-based financing worldwide.