Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Fitch Ratings expects full-year 2025 sukuk issuance to surpass 2024 levels, with 2026 prospects described as “promising.”
“Global sukuk issuance is likely to surpass 2024 this year due to lower rates, steady Islamic investor demand, and issuers’ funding and diversification needs, with 2026 prospects being promising,” said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings.
“Risks persist from new sharia requirements, geopolitics, and market volatility, but fundamentals are solid. About 80% of Fitch-rated sukuk are investment grade, with no defaults or fallen angels in 3Q25.”
Sukuk accounted for 40% of the total outstanding debt capital market in the Gulf Cooperation Council (GCC) countries, according to Fitch Ratings. The share of sukuk also exceeded 35% of total debt capital market issuances in core Islamic finance markets — the GCC, Malaysia, Indonesia, Türkiye, and Pakistan — compared with 27.5% in 2024.
Global outstanding sukuk rose by 15.5% year-on-year to cross $1 trillion by the end of the third quarter, underscoring the growing significance of Islamic finance instruments. Fitch said sukuk issuances now account for 16% of all emerging-market dollar debt issuance (excluding China) and remain a key funding tool for sovereign and corporate entities across the GCC and ASEAN.
Core markets issued around $80 billion of sukuk during the quarter — the highest third-quarter volume on record — marking an 89% year-on-year increase and a 22% rise from the previous quarter. In contrast, bond issuance in these markets fell by 17.6% over the same period. Fitch attributed the surge to lower interest rates, resilient Islamic investor demand, and issuers’ refinancing and diversification needs.
The GCC and ASEAN continue to anchor the sukuk landscape, accounting for most new issues, with Malaysia, Indonesia, and Türkiye together contributing 64% of global issuance during the quarter. Fitch also noted growing issuance of subordinated and ESG-linked sukuk, which now represent 13% of outstanding US dollar sukuk.
Fitch’s outlook remains positive on the sector’s fundamentals, highlighting that approximately 88% of sukuk issuers maintain a Stable Outlook, and that the asset class continues to attract new participants amid a strengthening regulatory environment and consistent investor appetite across key Islamic finance jurisdictions.
