Although traditional sukuk (or Islamic bonds) are still the fastest-growing segment of the Islamic finance market, new structures are rapidly gaining acceptance. Based on conventional riba-(interest) based instruments, these structures are evolving to meet the financing needs of banks and companies. They are also meeting the demands of both religious and secular investors for assets with a variety of risk-return profiles, and at the same time, countering objections from some Islamic scholars that many plain vanilla sukuk do not conform to Shar’iah principles.

Global sukuk volume at the end of 2007 reached $97.3 billion after six years of growth, with the majority coming from Malaysia and the Gulf. Islamic finance in general makes up only a small part of the world finance industry, and is estimated by Moody’s Investor Services to be worth around $700 billion globally. However, it has grown by around 15% in each of the past three years, partly as a result of the increased wealth in Islamic countries driven by high oil prices. The Gulf Cooperation Council (GCC) states issued 50 sukuk last year, worth more than $9 billion, with the United Arab Emirates (UAE) and Saudi Arabia accounting for about 87% of the total. The other four GCC member states are Bahrain, Kuwait, Oman and Qatar.