Overview

The sukuk market was substantially affected by the global economic downturn with sukuk issuances at the end of 2008 being less than half those at the end of 2007, according to a report issued by Standard & Poor’s. The drought in sukuk issuances, which took hold in the fourth quarter of 2008 now appears to be ending. The rapid growth of the sukuk market from 2004-07 was brought to an abrupt halt at the end of 2008, and undermined the theory that the Islamic capital markets had decoupled from the conventional capital markets.

As at the end of 2007, global sukuk issuance equalled $46.65bn (£28.4m) thanks to high oil prices, easy access to financing and a sentiment in favour of Islamic products in much of the Muslim majority world. In September 2008, it was generally believed that the Islamic markets had matured and were not dependent on the price of oil. In addition, the real assets that underlay Islamic structures provided protection against the credit crunch.

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