Fitch flags soft sukuk liquidity

Fitch Ratings said liquidity across its rated sukuk was little changed from August but remained weaker than in January, before the Iran conflict. Its average Bloomberg Liquidity Assessment score was 62 in early November, compared with 64 in August and 68 in January; the March low was 55. Fitch’s measure scores securities from 1 to 100, with higher scores indicating lower costs of liquidation.

Investment-grade sukuk averaged 67 on November 2, against 35 for non-investment-grade issues. About 69% of rated sukuk scored above 50, below January’s 81%, while the median score was 61, compared with 68 before the conflict. Fitch said liquidity is affected by geopolitical volatility, interest rates and capital flows, and that these factors will continue to influence market conditions; its covered sukuk market exceeds $950bn.