The use of blockchain technology in sukuk is expected to facilitate growth of the Islamic bond market, allowing issuers of conventional bonds to more easily tap the liquidity available in the Islamic finance space, according to ratings agency Moody's Investors Service. Following the issue of the first sukuk on an open-source blockchain by Dubai-based Islamic Fintech start-up Wethaq last month, the ratings agency said the use of the technology could make Islamic bonds cheaper and easier to issue. “Fintech sukuks will drive standardisation, cost efficiency and growth in the sukuk market, which will support Islamic banks' profitability,” the agency said in its latest report. “Blockchain can help reduce costs and increase speed by streamlining processes and eliminating redundancies that would help narrow the yield gap with conventional banks. The costs and time involved in issuing a sukuk are currently greater than for a conventional bond,” Moody’s said. Wethaq partnered with enterprise blockchain software firm R3 to build the platform for its sukuk issuance, which was carried out under the supervision of the Dubai Financial Services Authority. The blockchain platform built on R3’s Corda Enterprise is aimed at improving market infrastructure to support the issuance and trading of sukuk securities. It will make sukuk more accessible by digitising the costly and lengthy manual issuance process. The ratings agency also noted “the complexity and higher costs associated with sukuk issuance has been driving issuers including sovereigns, corporates and financial institutions to issue conventional bonds, resulting in a substantial gap between global bond issuance versus sukuk issuance volumes”. The sukuk market currently remains concentrated in the core Islamic finance markets of the Gulf Co-operation Council, Malaysia, Indonesia and Turkey. Total sukuk issuance is expected to be around $130 billion (Dh477.4bn) in 2019, up 6 per cent from $123 billion in 2018, Moody’s said. According to rival ratings agency S&P Global, total bond issuance last year stood at $5.8 trillion.