DUBAI, 3 October 2007 — The value of Islamic bonds issued in the first nine months of the year doubled to $22.4 billion as the Gulf Arab states helped the industry weather a storm in global debt markets, according to Zawya.com data. Bonds originating from the region, which pump about a fifth of the world’s oil, topped $14.5 billion for the nine-month period, representing almost two thirds of the global market, according to Zawya.com data.

Ijarah structured bonds, linked to a form of Islamic leasing agreement, accounted for 46 percent of all issuance over the same nine-month period, Zawya’s Sukuk Monitor showed.

Pointing to a slowdown, Zawya’s data indicates that only eight of the total 81 sukuk issued in the first nine months, worth $1.3 billion, were closed since the current global market turmoil began.

The Zawya data showed that Bahrain remains the hub for Islamic finance in the Middle East, accounting for about a quarter of all global issuance.

The Gulf archipelago continues to shrug off competition from Dubai, which is seeking to become a top location for the region’s financial industry. “Credit spreads are tightening again and we’re cautiously optimistic,” Arul Kandasamy, head of Islamic finance at Barclays Capital, told Zawya Dow Jones yesterday.

Bond market volatility and a slowdown in investor demand have already forced United Arab Emirates-based Dana Gas and DAE Aviation Holdings to put on hold debt issues worth $1.94 billion.

Saudi Basic Industries Corp. was forced to lower the senior unsecured bond portion of its financing to buy GE Plastics to $1.5 billion from about $2.76 billion and raise the bank loan portion to about $6.6 billion from $5.4 billion because of the tightening in global credit markets.

Earlier in July, Abu Dhabi-based First Gulf Bank (ADS) postponed its $3.5 billion Eurobond program and Bahrain’s Ithmaar Bank delayed a $300 million sale of five-year Islamic bonds. National Bank of Abu Dhabi plans to delay its $1.7 billion bond program until conditions improve in global debt markets.

(The writer is from Zawya Dow Jones)