KUALA LUMPUR: Global 2010 sukuk sales are unlikely to exceed markedly last year’s figure, with Europe’s debt woes expected to weigh on issuance, a quarterly Reuters poll showed on Tuesday.

Sukuk sales are expected to total $23-25 billion in 2010 compared with $23.3 billion last year and $130 billion in total outstanding sukuk debt, a survey of 11 Islamic finance professionals showed.

A similar poll in April had forecast sales of more than $28 billion this year.

Uncertainty over the global economy, euro zone’s sovereign ratings and governments’ reluctance to borrow after the recent spending binge to shore up their economies are expected to depress Islamic bond sales, the poll showed.

More sukuk defaults, debt restructuring difficulties and a lack of liquidity in some financial markets could also obstruct issuance, said Mohd Effendi Abdullah, head of Islamic markets at Malaysia’s AmInvestment Bank Berhad.

In the first half, sukuk sales doubled to $20.4 billion from a year ago, but bankers expect slack business in the second half of the year.

Global sukuk sales jumped 56 percent last year after tough market conditions pushed issuance down to $14.9 billion in 2008. But sales remained well below the record $34.3 billion logged in 2007, according to Standard & Poor’s data.

Total conventional bond issuance stood at $2.46 trillion in the first half of 2010 compared with $2.97 trillion in the first half of 2009, according to Thomson Reuters data.

Confidence in Islamic financing instruments has taken a knock due to Dubai’s debt restructuring and uncertainty over the legal rights of sukuk holders as the first major defaults emerged, including US energy firm East Cameron.

The HSBC/DIFX Amanah Sukuk US Dollar Bond Index yielded 4.356 as of July 16, up from 4.618 on April 16. In contrast, the yield on its Middle East Conventional US Dollar Bond Index fell 0.186 during that period.

Issuers in Malaysia and the Middle East would account for the bulk of sukuk sales this year, according to the poll.