The study says that issuance reached a record high of $51.2 billion in 2010--including those issued and matured that same year--besting the previous peak in 2007 by 34%.
However, structural differences and geographic disparities still hinder worldwide uptake.
In 2011, S&P believes that the depth and breadth of sukuk issuance will continue to hinge on the extent of the global economic recovery. This is notably crucial, in S&P view, for the return of corporate sukuk issuers, including
financial institutions, which fell from an average of about 65% over 2001-2007 to a mere 12% of issuance in 2010.
In geographic terms, the regional economic slowdown since mid-2008 has curtailed the financing needs of Gulf issuers. In doing so, it has recentered the sukuk market growth on its historical engine and mainstay, Malaysia, which accounted for 78% of sukuk in 2010. S&P expects the Asian markets to remain buoyant at least over the medium term. Meanwhile, S&P anticipates that the Gulf Cooperation Council (GCC) region will catch up, and start to play a larger and more sustainable role in the market. S&P opinion is based on its expectation of a gradual recovery in GCC economic activities, and the region's need to fund the huge pipeline of government projects and long-term events, such as the 2022 World Cup in Qatar.
S&P does not foresee that non-Muslim countries will change the shape of the market over the medium term. During the crisis, Western investors showed a marked interest in sukuk, partly because their average yield has been slightly
higher than that available on a "plain vanilla" conventional comparable instrument, owing to their structured nature and lower liquidity. However, S&P believes this trend will slow down once rates begin to rise, which will increase the average yield of conventional bonds.
S&P also believes that the complex web of socioeconomic, political, and religious issues in many of these non-Muslim countries is holding back any swift uptake of sukuk. Instead, S&P sees the market's future as lying with countries whose economies have been less affected by the crisis, namely the GCC and South East Asia. S&P thinks that broader global demand for sukuk still depends on increasing their liquidity and standardizing Sharia interpretation.
The market needs leaders to provide vision and direction, to take the domestic and compartmentalized initiatives of various countries toward clear international and standardized market principles.