The idea that the conservative strictures of Islamic finance somehow offered protection from the wider global financial crisis was proven false in 2008 and 2009. The nascent market for Islamic bonds, or sukuk, was hit hard by the financial crisis. Since their peak in 2007, when almost $35bn worth of sukuk financing was issued worldwide, volumes have plummeted. About $15bn worth of sukuk were issued in 2008, recovering to $23bn in 2009. The sector, however, is tipped to rally strongly in 2010. Ratings agency Standard & Poor's (S&P) estimates about $20bn of sukuk issuance is due to come to market this year, with other estimates as high as $30bn to $40bn.
"We're going to see a good sustained pick-up in volume of issuance this year," says Mohammed Dawood, director of global capital markets at HSBC Amanah. "Despite Islamic finance taking slightly longer to recover than other markets, there is still a lot of liquidity around looking for a home. Right now there is an extremely good opportunity for issuers generally to be able to tap the Islamic market."
