Known as sukuk, the bond had to be scrutinised by Islamic scholars to ensure it did not breach a strict ban on charging or paying interest contained in Shari'a law. The move could open up a lucrative new revenue stream for the Dublin exchange as Gulf states turn to Western financial markets to help pay for massive infrastructural projects.

The sukuk was issued by the National Industries Company for Building Materials, a Kuwaiti manufacturing and building materials group.

"The Middle East has not been tapped from a debt perspective so clearly there's huge potential, " said Deirdre Somers, director of listings at the Irish Stock Exchange. "Up to now, they have had enough money without the need to borrow more. But they need to grow their infrastructure to prepare for the day when the oil runs dry."

More than $10bn of sukuk was issued in the Gulf region alone in the first half of this year, equal to the entire global market in 2005. The securities are attractive to Western investors because they are often state-backed while offering higher returns than conventional bonds. To ensure compliance with Shari'a law, investors get paid a share of profits from the underlying assets rather than a rate of interest.

The Dublin exchange is already a regional centre for trading in asset-backed securities, accounting for as much as 75% of the European market, Somers said. But it faces stiff competition from other financial centres for the budding sukuk market, according to Adrian Creed, a partner at London law firm Trowers & Hamlins.

"There are three prime movers to take this market:

Kuala Lumpur, Bahrain and London, " he said. "It's still up for grabs to a certain extent and, with such a nascent market, there are opportunities for other financial centres."

The Dublin exchange has developed a successful trade in debt securities to counter a decline in its traditional business of trading in equities and government gilts.

"The Irish market is trying to be seen as a niche alternative exchange as its traditional business came under pressure, " said John Cotter, professor of finance and director of the centre for financial markets at UCD.

While some initiatives have ended in failure, such as the illfated Iteq exchange for technology companies, others have put Dublin on the map.

"If you want to issue a bond with different characteristics there are two places to go in Europe: Dublin or Luxembourg, " said Brian Lucey, senior lecturer in finance at Trinity College.

"In Dublin you get lighttouch regulation and swift approval but, nevertheless, it's recognised worldwide as having a good regulatory regime."