Several UAE-based corporates are finalising plans to launch sukuk issues, which have slowed down since the spreading and deepening of the financial crisis from mid-2008, according to an Islamic finance expert.

Talking to Emirates Business, Dr Hussain Hamid Hassan, Chairman of Dubai Islamic Bank (DIB) Shariah board, said: "You will see several sukuk issues hitting the market within months."

With "back to basics" emerging as the most-sought-after catchphrase in the financial services industry during the current crisis, Islamic fund raising programmes are fast gaining popularity in the GCC markets, industry experts said.

The argument that the Islamic institutions remain relatively unscathed during the ongoing financial crisis – as they are not exposed to toxic assets as in the case of their conventional counterparts – renders greater credence to Islamic institutions.

"The Shariah restrictions on derivative structure could be the main reason why Islamic banks were not plugged into these toxic products," said Dr Humayon Dar, Chief Executive Officer of BMG Advisors UK, part of BMB Group, a leading global alternatives asset management and financial services firm focused on the comprehensive investment needs of sophisticated Islamic investors.

According to Dar, sukuk al ijara will enjoy an edge over the other two forms of sukuks – mudharaba and musharaka, which were popular in the market during the past two to three years.

"Moreover, there has been an ongoing controversy in the market around these two instruments, though I don't personally attach much seriousness to that," Dar added. There are views expressed within the banking industry that with the trust having taken a beating, anything that is secured will have more takers. Financing activity has almost died down during the last two quarters though signs of the re-emergence of the same are being noticed of late.

In ijara, the issuer will have assets, say in the form of a piece of land which can be sold to a special purpose vehicle (SPV) as part of the process to launch a sukuk. This SPV raise funds from the market by selling the sukuk and give it to the issuer who seeks funding. SPV will then lease the asset back to the issuer who will start paying rental against the asset, and this forms the real return to the investors.

"In the case of mudharaba and musharaka, you need not have to have an asset to issue sukuk. Hence these two are perceived as riskier to the investors," Dar said.

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