Observers, pundits and analysts have long bemoaned the fact that the capital market in the region was all but non-existent. At least, that is, until the Central Bank of BahrainCentral Bank of Bahrain began issuing Sukuk and helped to kick-start the Islamic capital market in the region.

As soon as the first Sukuk appeared, then the world sat up and started to speculate what would happen if these new fangled instruments took off in any significant way. And then the strangest thing happened. They took off in a significant way.

Overnight, the way to guarantee an issuer headlines over each new issue was to make sure that the debt instrument was structured in an Islamic fashion and leave the rest to the newspaper editors.

It was around this time that the team at Zawya.comZawya.com realised that there was a gap in the market for cumulative knowledge about the Islamic capital market globally. One potential fly in the ointments was that the Malaysian market included many issues that were structured as BBA issues and these were not considered to be Shari'ah compliant in the Middle East. ZawyaZawya took the decision not to include these issues in its Sukuk Monitor.

Time has proved that this decision was a wise one since even Bank Negara, the Central Bank of Malaysia, has advised debt issuers to hold back on BBA Sukuk for the very reason that they are not internationally acceptable.

In any event, ZawyaZawya's Sukuk Monitor has now reached the stage of 'indispensable tool' for those serious about watching the development of the Islamic debt capital market. Each issue is analyzed in depth and new tools introduced by ZawyaZawya mean that users can slice and dice the raw data on Sukuk issuance in any way that they choose.

Add to this real-time secondary market information provided by a range of leading market makers and the industry finally has something that it always dreamed of: a one-stop repository of information on all issues, major and minor, going back to the dawn of Sukuk issuance.

A brief spin around the Sukuk Monitor today will reveal that:
In the first half of 2007, the total number of issues reached 30 in comparison to the 80 issues from 2006 and the 39 from 2005. The number of issues may be proportionately lower but the value of issue has grown and stands at over $13 billion for the first half of the year compared to $18 billion for the whole of 2006.

Another area of growth has been in the average size of issues which has been pushed up to $436 million for the first half of 2007 from $227 million in 2006. Clearly recent multi billion dollar deals are having an effect on the average size.

Of course one of the other most interesting factors in analysing the growth of the industry lies in looking at which countries are most active in issuing. Malaysia always comes out well in such comparisons, although many of the issues from Malaysia are local issues in local currency of Malaysian Ringgit which do not hold much appeal for international investors who do not want significant exposure to Ringgit as a foreign currency even though they would be happy to invest in the wide variety of solid Malaysian corporates. Hardly surprising, then, that Malaysia comes out top with 47 per cent of all issues to date with a total of 82 issues.

As the charts show, there is a host of interesting ways that the user can interrogate the raw data and extract precisely the information that they require. ZawyaZawya has been plugging away at the Sukuk scene for some years now and has finally arrived at a product that should prove to be very useful for investors, structurers and issuers and the vast army that goes behind each new issue.

© Banker Middle East 2007