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Global issuance of sukuk, or Islamic bonds, rallied during the third quarter with the value of sukuk issued rising 82% in the latest sign that confidence is returning to capital markets

Investors are putting more faith in the sukuk market, seen as a more stable platform to raise capital, as the financial crisis eases and global market conditions improve rapidly, bankers say.

Sukuk comply with Islam's ban on interest and are backed by physical assets from which returns are derived and paid to bondholders instead. European and Asian investors are increasingly buying into Middle East Islamic bonds in a bid to diversify their portfolios into a market showing greater signs of recovery, according to Mark Waters, BNP Paribas's head of debt capital markets in the Middle East.