MANAMA: The amount of sukuk issuance declined last year after years of massive growth.

The amount raised from issuance decreased by 54.5 per cent last year to $15.1billion, as compared to $33.1bn in 2007, according to Global Investment House's Global Sukuk Report.

Despite that, the number of global sukuk issues increased from 129 in 2007 to 165 last year.

"The decline in sukuk issuance is due to the credit crunch that forced investors to step aside from the fixed income market, including the Islamic one," the report said.

"As evident of the credit crunch effect on sukuk, issuances in the fourth quarter of 2008 were weak when compared with other quarters in the same year.

"In the first three quarters of last year, the number of sukuk issuances was 139 raising $14.3bn, averaging $4.8bn per quarter.

"On the other hand, the number of sukuk issuance in the fourth quarter of 2008 was 26, raising $800 million."

The Islamic bond market is still concentrated in the GCC region and Malaysia, in terms of dollar amount.

"GCC countries accounted for 55.5pc of the dollar amount issued, while Malaysia accounted for 36.3pc," the report adds.

"Meanwhile, the number of sukuk issued by corporate slightly decreased from 97 in 2007 to reach 92, while the number of sovereign sukuk increased by more than double to reach 73 in 2008 from 32 in 2007.

"Out of 165 sukuk issued last year, 92 (55.8pc) were corporate issues, as compared to 97 out of 129 (75.2pc) corporate issues in 2007. "Despite the decrease, corporate constituted a large piece of total amount issued. "Corporate sukuk issues amounted to $13.3bn, or 88.5pc of the total dollar amount, while sovereign sukuk were worth $1.7bn, or 11.5pc in the same period."