Global sukuk issuance has fallen from $11.1bn during the first seven months of 2008 to $9.3bn in the same period of 2009, according to a report by Moody’s Investors Services.

The agency said that potentially, $50bn of sukuk could be issued over the medium term.

“The smaller amount of issuance was due not only to the still challenging market conditions and drying up of liquidity, but also to the less supportive economic environment in the Gulf Co-operation Council countries, particularly in the United Arab Emirates,” says Mohamed Damak, a credit analyst at Moody’s.

He adds that he expects the outlook for sukuk to remain positive despite being challenged by factors including the lack of standard sharia interpretation and low liquidity in the sukuk market.

In the first seven months Malaysia was the dominant issuer of sukuk, launching deals that accounted for 45 per cent of the market. Saudi Arabia produced 22 per cent of total sukuk issuance.