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Global sukuk market to grow further

Standard & Poor's cites general debt market conditions, government support programmes

Gulf News

Dubai: The global Islamic bond market is likely to continue to grow this year due to government support measures and improved overall debt market conditions, ratings agency Standard & Poor's said in a report.

The sukuk market returned to growth in the first half of 2010, with global sukuk issuance topping $13.7 billion (Dh50 billion) during this period, nearly twice the $7.1 billion recorded during the same period last year, S&P said in a report issued late on Monday.

Slight improvement

"In our view, the slight improvement in market conditions since the significant slowdown in 2008 has contributed to this performance," it said.

S&P said it believes that the sukuk market has grown large enough to support a transformation in the Islamic fund industry.

Sukuk funds are increasingly popular among investors as they produce fixed-income returns similar to those from traditional fixed-income investment products," said S&P credit analyst Samira Mensah.

"Sukuk funds also help investors to diversify away from pure equity and real estate funds, which suffered heavily during the last credit cycle."

The expansion of the sukuk funds industry will go hand in hand with the growth of the sukuk market, which continues to face obstacles, the analyst added.