The potential demand and supply pipeline of sukuk is expected to grow, a new survey has found.

Despite this increase, demand is still expected to outstrip supply substantially until next year, when it is predicted that supply will begin to outpace demand, according to the findings of Thomson Reuters' third consecutive Sukuk Perceptions and Forecast study presented at WIBC 2014.

The study was based on a survey of sukuk lead arrangers, investors and other key market players such as regulators, legal advisers and rating agencies, predominantly based in Islamic markets in the Middle East and North Africa and Southeast Asia, said a report in the Gulf Daily News (GDN), our sister publication.

The survey was conducted in August and September this year.

The primary empirical data gathered from the survey was subsequently developed to provide forward-looking analytics on the appetites and preferences of sukuk investors for this year and beyond.

"The global sukuk market has picked up in terms of new issuance and we see more positive signs following the five sovereign and three corporate debutantes, which have increased the level of confidence for issuers to consider sukuk," Thomson Reuters' global head of Islamic capital markets Dr Sayd Farook said.

"The debutante sovereigns and corporates may not continue to tap the sukuk market but supply growth will not fall off in their absence."

He said increased support from governments was in evidence, with a number of countries finalising regulations to allow the issuance of sukuk in their local markets.

"Countries such as Egypt, Jordan, Morocco, Oman and Tunisia have shown great interest in issuing sukuk next year, particularly to support and fund infrastructure projects," he said.

"Nevertheless, a number of challenges that limit the growth of the sector need to be solved.

"Deficiencies still persist in areas such as transparency, standardisation and liquidity in the secondary market, mainly due to limited trading mechanisms and the different treatment of certain structures in different jurisdictions," he said. - TradeArabia News Service