Islamic bond sales jumped 70 per cent last year as borrowers led by Gulf Arab companies sidestepped the credit market slump triggered by record defaults on U.S. home loans.
Global sales of so-called sukuk rose to $30.8 billion, from $18.1 billion in 2006, according to data compiled by Bloomberg.
Borrowers in Gulf nations including Saudi Arabia and the United Arab Emirates sold $17.9 billion of the securities, 75 per cent more than last year.
“Most sukuk sales come from the Middle East and Asia, which are firing on all cylinders while the U.S. and Europe are hampered by the subprime crisis,” Arul Kandasamy, Dubai-based head of Islamic finance for Barclays Capital, said in a phone interview from Malaysia yesterday. “It’s also a much newer market that’s been showing explosive growth for about three years.”
Saudi Electricity Co., the kingdom’s largest power producer, and Aldar Properties PJSC, Abu Dhabi’s biggest property developer, were among companies selling sukuk for the first time, spurred by economic growth as oil prices soared. In the European bond market, sales fell by 1 per cent from 2006, their first decline since 2000, after companies abandoned plans as borrowing costs jumped to a five-year high.