Abstract
Global capital markets have long been functioning without Islamic components. Only recently have they been subject to the emergence of a new dimension: the sukuk (Islamic Bond) market. The sukuk market has experienced a spectacular growth since 2001 in the Middle East, supported by ultra-high petro-derived liquidity levels, which have fuelled by a growing demand for Islamic financial services and propelled the number of Islamic issuers within the region. However, the sukuk market has not been immune to the recent financial crisis, and the activity has notably slowed amidst difficult global market conditions. This has allowed the market some time for reflection on a number of specific issues, which have gradually emerged and will need to be solved. Although the long term outlook for the industry remains bullish, with the potential demand for sukuk likely to far outstrip available supplies, the future for sukuk remains full of challenges and constraints.
