A. SREENIVASA REDDY (ABU DHABI)
Fitch Ratings expects the UAE to remain one of the most important emerging-market issuers of US dollar debt and sukuk in 2026, supported by a deepening debt capital market and sustained issuance activity.
Speaking to Aletihad, Bashar Al Natoor, Managing Director and Global Head of Islamic Finance at Fitch Ratings, said the UAE’s total outstanding debt capital market (DCM) surpassed $325 billion at the end of 2025, reflecting growth of about 9% year-on-year.
According to Al Natoor, around 70% of the UAE’s outstanding DCM is dollar-denominated, amounting to roughly $226 billion, while about 24% is denominated in UAE dirhams, equivalent to nearly $78 billion.
Sukuk outstanding exceeded $70 billion, accounting for 22% of total UAE DCM at end-2025, underlining the importance of Islamic finance instruments in the country’s funding mix.
Issuance activity in 2025 remained strong, with total UAE debt issuances, including sukuk, exceeding $169 billion during the year. Of this, around 23% was issued in US dollars and 74% in dirhams, highlighting the role of the local-currency market alongside international issuance.
Sukuk accounted for about 13% of total DCM issuance across all currencies and nearly 50% of dollar-denominated issuance in 2025.
The ESG segment also continued to expand. Fitch Ratings said ESG-labelled issuances in the UAE reached around $5.6 billion in 2025, with sukuk making up more than 60% of that total.
Outstanding ESG debt stood at about $29 billion at end-2025, with sukuk accounting for over 40%.
Fitch data show that close to 80% of ESG issuances in the UAE were dollar-denominated, reflecting strong international investor participation in sustainable finance instruments.
Across the wider Gulf Cooperation Council (GCC), Fitch expects debt capital markets to remain sizeable within emerging markets, with the region continuing to be among the largest EM issuers of US dollar debt and sukuk in 2026.
The GCC DCM outstanding surpassed $1.1 trillion in 2025, representing growth of over 14% year-on-year, and is forecast to exceed $1.25 trillion in 2026.
Saudi Arabia and the UAE together accounted for the majority of GCC outstanding DCM, making up 46% and 29% respectively, followed by Qatar at 12%, Bahrain at 5%, Kuwait at 4% and Oman at 4%. Total GCC DCM issuances exceeded $400 billion in 2025, up 3% year-on-year, with US dollar issuance dominating overall activity.
Sukuk continued to gain prominence across the region, with Fitch data showing that GCC dollar sukuk issuance rose 72.2% year-on-year to $70.2 billion in 2025, significantly outpacing growth in conventional dollar bonds.
“Most GCC issuers continued to maintain strong market access in 2025 and so far in 2026 despite global and regional shocks,” Al Natoor said.
“Sukuk funding share in the GCC DCM outstanding expanded to over 40%, the highest to date. About 84% of Fitch-rated GCC sukuk are investment-grade, and 90% of issuers are on Stable Outlooks. While there were no defaults or falling angels, there were rising stars, with many Omani sukuk upgraded following the sovereign upgrade.”
In emerging markets excluding China, the GCC accounted for 35% of all US dollar debt issued in 2025 and 81% of dollar sukuk issuance, underscoring the region’s growing influence in global debt markets.
Overall, Fitch expects both the UAE and the wider GCC to continue playing a central role in emerging-market debt and sukuk issuance in 2026, supported by refinancing needs, funding for projects, diversification efforts, and ongoing initiatives to further develop domestic and international debt capital markets.