The value of Islamic sukuk bonds dropped sharply last year after Malaysia stopped issuing them while oil prices continued their fall, the Standard & Poor's rating agency said Wednesday.

The trend is expected to continue in 2016 as the main countries using the Islamic form of debt, especially in the Gulf, are switching to conventional bonds, an S&P report said.

It said sukuk worth $63.5 billion were issued in 2015 compared with $116.4 billion in the previous year, a 45.4 percent decline. The drop was largely due to Malaysia's central bank, one of the largest global providers of the product, which stopped issuing sukuk.

It issued $50 billion of sukuk alone in 2014.

Were Malaysia removed from calculations, sukuk would have dropped just 5 percent in 2015, S&P said.

The rating agency forecasts that sukuk issuance will drop to between $50 billion and $55 billion this year, a decline of 13-21 percent. The drop in sukuk comes after years of double-digit growth in the Islamic sharia-compliant bonds.

Other major factors negatively impacting sukuk include low oil prices and the hike in U.S. interest rates, both of which are expected to drain liquidity. S&P said that energy-rich Gulf Cooperation Council (GCC) states opted for conventional bonds rather than sukuk to finance their deficits because of complex procedures involving the issuance of sukuk.

Last year, conventional bonds issued by GCC states jumped 140 percent to $58 billion while sukuk dropped by 22 percent to $18 billion.

This came after four years in which conventional bonds and sukuk remained almost equal.

The issuance of debt by GCC states last year, both sukuk and bonds, jumped by 60 percent to $75 billion mainly to finance budget deficits.

Unlike conventional bonds, which give ownership of debt, sukuk are asset-based securities that give investors a share because Islamic sharia law prohibits interest-bearing debt.