January 30, 2008 at 3:03 pm

Demand fuels growth and evolution of corporate sukuk market with sukuk costs set to drop – S&P

Standard & Poor’s Ratings Services said market demand for sukuks, or Islamic bonds, will continue to the extent that they evolve into a more commoditized asset class.

“Although corporate sukuks are as yet few in number, their popularity looks set to grow as the capital markets in Muslim countries develop and corporate borrowers seek a Sharia-compliant alternative to conventional debt,” S&P said.

The ratings agency said financial institutions will compete to capture this market segment and eventually narrow the pricing gap between sukuks and conventional instruments.

Listed sukuks on the Dubai International Financial Exchange alone amounted to about 16.1 bln usd at year-end 2007, up from 7.6 bln usd in 2006.

 

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