It said the 2010 sukuk market would be driven by the recovery in global economic activity, record low interest rates, continued sovereign fund raising to support economic growth as well as revival of private sector projects.

"More sovereign and corporate issuers are anticipated in 2010, which include potential debuts from Japan, Thailand, Turkey, United Kingdom and Russia," it noted.

According to the study, sovereign sukuk issuances in the first half of 2010 were expected to help revive the global sukuk market as they provided the necessary benchmark pricing for the private sector to gauge investor appetite this year.

The report said over the years, the sukuk market had grown to reach approximately US$100 billion and contributed 12 per cent of the total global Islamic finance assets in 2009.

KFH Research said in the first half of 2010, total sukuk issued globally was valued at US$16.5 billion, 116.3 per cent higher than the US$7.6 billion raised in first half of 2009.

By country, Malaysia continued to dominate the global sukuk market, contributing 60.5 per cent of the total value of sukuk issued in first half of 2010, it said.

Saudi Arabia and Indonesia each trailed at 14.1 per cent.

By currency type, ringgit-denominated sukuk deals topped at 53.4 per cent, followed by US dollar deals at 10.3 per cent and Qatari riyal issues, at 8.3 per cent.

The report indicated that the long-term prospects for the sukuk market were expected to remain strong.

Source: http://www.opalesque.com/IslamicFinance_Briefing/