Although previously, Sukuk, or Islamic bonds, have not been defaulted, confidence in Sukuk went down to due dollar shortages and debt issues.
Price of Maldives sukuk has significantly gone down in the market.
Although previously, Sukuk, or Islamic bonds, have not been defaulted, confidence in Sukuk went down to due dollar shortages and debt issues.
The USD 500 million (MVR 7.7 billion) Sukuk sold by the previous government in 2021 is listed in the Abu Dhabi stock market. According to Bloomberg, Sukuk prices lowered due to Maldives' debt issues.
Sukuk is prices at 70 cents per dollar, which is a double digit decrease this month. This is the first time Sukuk prices have decreased this markedly since they were listed. The most recent time when Sukuk prices decreased most was in 2022.
Danske Bank's Portfolio Manager Soeren Moerch said that the reason behind Sukuk prices decreasing so significantly is the decrease in Maldives' foreign reserve. He highlighted that Sukuk had not defaulted so far, and questioned whether Islamic nations would allow this to happen.
Last week, Fitch downgraded Maldives rating from CCC to CC.
Sukuk repayment is set for 2026. However, next month, USD 25 million has to paid as coupon payment or interest to investors. Next year, USD 50 million as coupon payment and uSD 25 million as coupon payment in 2026 also have to be paid.
As per MMA statistics, there is currently USD 395 million in Maldives' reserves. Usable reserves is at USD 45 million. MMA has said that usable reserve will be improved within the last month.
The government is working on facilitating a USD 400 million currency swap through India's central bank, Reserve Bank of India (RBI). They also aim to sell a green bond.
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