Rising Islamic bond mart
SINGAPORE: The global market for Islamic bonds, or sukuk, could top US$100 billion (K290.7 billion) in the next few years after exceeding US$60 billion (K174.4 billion) last year, Standard and Poor’s said yesterday.
Massive investment and financing needs of countries from Asia and the Gulf region in the Middle East are driving the growth, the US credit ratings firm said in a statement.
While the growth in sukuk issuances has slowed down over the past six months due to a global credit crunch, it is expected to pick back up after market conditions normalise, the firm said.
“The global market for sukuk more than doubled in 2007 to exceed US$60 billion and is on track to top the symbolic 100 billion-dollar mark in the next few years,” Standard and Poor’s said.
“We expect sukuk growth to remain on the same impressive trajectory, fuelled by huge investment and financing needs - notably in countries of the Gulf and Asia,” the firm’s credit analyst Sani Hamid, said.
Sukuk, the Islamic equivalent of bond, is compliant with Muslim law and investment principles that prohibit the charging or paying of interests.
Companies and entities involved in project finance were the main issuers of sukuk, followed by banks.
Corporates find that sukuk are an alternative to financing their business or their projects, Hamid said.. – AFP
Business Stories