Sukuk issuance slowdown may dawn earlier over Omicron variant: Fitch

Uncertainty over Omicron's impact may drive this slowdown.

The usual year-end slowdown of sukuk issuance may come earlier in 2021 due to the new Omicron variant, according to a Fitch Ratings senior analyst.

Volatility and uncertainties spike on concerns about the re-emergence of COVID cases due to the new Omicron variant, and the possibility of further lockdowns in some countries may drive the slowdown in sukuk issuances to begin earlier, according to Bashar Al Natoor, global head of Islamic finance at Fitch Ratings.

"In most of the Organization of Islamic Cooperation’s 57 states, the full population that are fully vaccinated is below the 70%-80% level commonly suggested as consistent with herd immunity," Natoor said.

New COVID-19 variants (in this case Omicron), come with additional uncertainties, according to Natoor. These include whether Omicron will have increased transmissibility and or pose higher health risks; the efficiency levels of available vaccines; and whether protection against this variant can be maintained.

"Islamic finance is not cocooned from what is happening in the broader economies. In fact, Islamic finance has its specific challenges on top of the uncertainties and challenges in the relevant operating environment," Natoor said.

The impact will vary substantially from one sovereign to another and from one sector to another, he added.