Global issuance of Islamic bonds, or sukuk, has risen 40 percent in the first ten months of the year, helped by sovereign issues that will provide benchmark pricing to corporates still hesitant to launch, Moody's said on Tuesday.
"The recent surge in sovereign or government-backed issuance - amid continued uncertainty over the timing and magnitude of the economic recovery - is a long-awaited development that should help create a more efficient and soundly based sukuk market," the ratings agency said in a report.
"It should also help the market develop a more detailed yield curve, and hence a risk benchmark across several tenors and credit profiles," the report said. Several sovereigns, including Gulf Arab state Bahrain and Indonesia have issued sukuk in recent months.
A number of quasi-sovereign institutions have also issued sukuk in the Gulf Arab region, while corporates have yet to tap the market in significant numbers. Global issuance in sukuk fell over 50 percent in 2008 compared with 2007, as it was hit by the global liquidity freeze and a debate on the compliance of some of its structures with Islamic law.