Despite the shaky prospects of the global economy, Standard & Poor's Ratings Services maintains a strong outlook for Malaysia's bond market, reflecting positive bond market developments, ongoing growth in Islamic finance and steady macroeconomic fundamentals in the country.
About 70% of Malaysia's domestic debt issuance is in the form of Sukuks, making it the world's largest Islamic bond market, with over 60 per cent of the global Sukuk issuances originating from Malaysia. S&Ps managing director Surinder Kathpalia said policymakers in emerging markets viewed Malaysia as a "poster child" for bond market developments, given that it was now the fourth largest bond market in Asia after Japan, China and South Korea.
Malaysia, with an Islamic banking sector of about $43 billion, has been a pioneer in Islamic finance in southeast Asia. Its industry is at an advanced stage of development, and Kuala Lumpur is competing with financial centres such as Dubai and London to become a global hub for Islamic banking.