Total sukuk issued globally during the first half of this year was valued at $16.5 billion, an increase of 116.3 percent from $7.6 billion during the corresponding period in 2009, said the report prepared by Kuwait Finance House (KFH) Research Limited.

Sukuk market is set to maintain its vitality during 2010 on the back of the recovery in global economic activity, record low interest rates, continued sovereign fund-raising to support economic growth as well as a revival of private sector projects.

Approximately 79.7 percent of fund-raisers were sovereign and quasi-sovereign entities during the first half of 2010.

Power and utilities sector trailed behind at 11.5 percent of total sukuk issues, while financial services sector stood at 3.4 percent, driven by continued infrastructure spending and fund raising activities by financial institutions worldwide.

"More sovereign and corporate issuers are anticipated in 2010, which include potential debuts from Japan, Thailand, Turkey, United Kingdom and Russia," the report said.

Malaysia continued to dominate the global sukuk market, contributing 60.5 percent of the total value of sukuk issued in first half of 2010.

In term of currencies, ringgit-denominated sukuk deals topped at 53.4 percent, followed by US dollar deals at 10.3 percent and Qatari riyal issues at 8.3 percent.

Sovereign sukuk issuances in the first half of 2010 were expected to help revive the global sukuk market as they provided the necessary benchmark pricing for the private sector to gauge investor appetite this year.

KFH report pointed out that the sukuk market has grown to approximately $100 billion and contributed towards 12 percent of total global Islamic finance assets in 2009.

"The sukuk market has come out of the worst of the financial crisis and its prospects remain high. In 2009, global sukuk issuances rebounded by 58.8 percent year on year to $24.65 billion, compared to the $15.46 billion raised in 2008," the report said.

"Sovereign and similar funds played a prominent role in the rehabilitation of the sukuk market after hitting 79.7 percent of the funding period."

Government allocations for development projects during 2010 and beyond have spurred the demand for sukuk, brightening the long-term prospects for the Islamic bond market, KFH report said.

Shariah-compliant products, government support for Islamic finance, huge investment and financing requirements in the GCC and Asia, as well as issuers' desire to tap investors from the Middle East and Muslim Asia, have remained key factors in driving the demand for sukuk.

"With a healthy array of sukuk in the pipeline, the market is attracting interest from an increasing number of issuers in Muslim and non-Muslim countries alike," the report added.