Islamic Bond Sales to Reach $30 Billion This Year, KFH Says

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Islamic bond sales should climb 50 percent to $30 billion this year, driven by low interest rates and spending by governments on infrastructure programs aimed at supporting growth, KFH Research Ltd. said.

About $20 billion of Islamic bonds announced last year are expected to be issued in 2010 and “another $10 billion or more could potentially enter the pipeline,” KFH Research senior analyst Tursina Yaacob said in a phone interview from Kuala Lumpur today. A “big chunk” will come from Asia, helped by the revival of private-sector projects and economic expansion.

Sales of Islamic bonds, or sukuk, totaled $20.2 billion last year, compared with $14.1 billion in 2008, when sales slumped due to the global financial crisis, and $31 billion in 2007 after oil earnings boosted Arab wealth, according to data compiled by Bloomberg. Malaysia and Indonesia accounted for 87 percent of sales in the first three months of this year, according to KFH Research.