The agency adds that tight conditions in markets are seeing up to 80 basis points added onto interest costs. “We estimate that around $10bn worth of largely sukuk financing was postponed in the last quarter of the year,” says Philipp Lotter, vice-president of Moody’s Middle East. “But much of this will be coming back in 2008.”

A number of sukuk issues have been publicly withdrawn from the market over the last few months because of rising interest costs, although some deals have been completed but with higher spreads. “Local liquidity remains strong but those wishing to attract international investors are paying up to 80 basis points more today than they were six months ago,” says Lotter.