Global sales of Islamic bonds, known as sukuk, could reach US$10 billion (Dh36.7bn) in 2009 after picking up in the second half of the year, Standard Chartered said on Monday. That would mean a return to levels last seen in 2005, when new issuances reached $10.76bn according to Islamic Finance Information Service (IFIS). In the first three months of 2009, new issuances stood at $1.8bn, one third less than in the year-earlier period. "We expect a pick-up in the next six months based on conversations with our customers," Afaq Khan, chief executive officer at Standard & Chartered's Islamic banking unit Saadiq, told reporters. Mr Khan said he was optimistic about the market following the recent $650 million issuance of an international dollar sukuk by the Indonesian government, which was seven times oversubscribed, with large demand from GCC investors. Recent Asian issuances of sovereign sukuk "could allow activity to fully rebound in the medium term," Moody's, the ratings agency, said in a report last week. In compliance with Shariah, sukuk pay investors in form of asset returns instead of interest. Mr Khan said his outlook was based on talking to customers who "are going back to their drawing boards, looking at projects and adjusting their business plans." Following a period of unprecented double-digit growth throughout 2007, when new issuances hit $60bn, investors rapidly lost their appetite for emerging market debt when the financial crisis hit. Many Sukuk were postponed when liquidity dried up and credit spreads widened. The issuance of new sukuk fell to $15.77 billion in 2008 compared with $46.65 in 2007, a 66 per cent year-on-year decline according to IFIS. Nevertheless, experts expect new issuances to resume double-digit growth once markets return to normal. uharnischfeger@thenational.ae