Examining the impact of geopolitical risks on the international Sukuk market

• Geopolitical risks (GPRs) influence the primary markets for international corporate sukuk. • Country-specific GPRs significantly hinder sukuk issuance. • Both global and local geopolitical risks increase primary sukuk pricing. • Rising GPRs often lead to lower issuance volumes. • Higher GPRs are associated with higher pricing in the primary international corporate sukuk market. • Country-specific GPRs have a more significant impact than global risks. This study explores how emerging geopolitical risks (GPRs) have affected the international corporate sukuk market over the last decade. It presents detailed evidence by examining their influence on two key areas: issuance volume and primary market pricing. Using cross-sectional analysis and panel regression, the study finds that rising GPRs often lead to lower issuance volumes. The results also show that higher GPRs are associated with higher pricing in the primary international corporate sukuk market, as investors demand a greater risk premium. Importantly, the empirical analysis demonstrates that country-specific GPRs have a more significant impact than global risks. These findings align with previous research on conventional bonds.