Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The outlook for sukuk issuance in the UAE remains strong, supported by policy initiatives and favourable market conditions, with 2025 marking a record year for the domestic sukuk market, according to Fitch Ratings.
Speaking to Aletihad, Bashar Al Natoor, Managing Director and Global Head of Islamic Finance at Fitch Ratings, said sukuk issuance in the UAE surpassed $20 billion in 2025, rising by more than 50% year on year and marking the highest annual issuance on record for the country.
Outstanding sukuk in the UAE also expanded sharply, crossing $70 billion by the end of 2025, an increase of over 19% year on year, highlighting the growing depth of the domestic Islamic debt market, Al Natoor said.
Sukuk continued to gain prominence within the UAE’s broader debt capital markets. Dollar-denominated sukuk accounted for nearly 50% of total dollar issuances in the UAE in 2025, a sharp rise from 21% in 2024, underscoring a shift in issuer and investor preference towards Shariah-compliant instruments.
“Sukuk issuances will remain strong in the UAE in 2026,” Al Natoor said, citing key policy initiatives such as the retail sukuk programme, the Islamic finance and halal strategy, and other measures aimed at enhancing standardisation and clarity in the sukuk market. He added that broader drivers — including funding diversification efforts, upcoming debt maturities, expectations of lower oil prices, and a lower interest-rate environment with further rate cuts anticipated — are expected to continue supporting issuance growth.
Fitch also highlighted recent regulatory developments that have strengthened the UAE’s sukuk framework. In the first half of 2025, the Higher Sharia Authority (HSA) of the Central Bank of the UAE issued a resolution on the sale of rights, prompting many sukuk issuers to incorporate provisions allowing trustees, upon obligor default, to register asset titles in the trustee’s name.
Al Natoor noted that while the HSA directly covers UAE institutions under the central bank’s umbrella, its resolutions also influence global sukuk markets given the significant role played by UAE banks as investors, arrangers and issuers.
Beyond the UAE, Fitch said the global sukuk market entered 2026 with strong fundamentals, with global issuance in 2025 reaching a record high of over $300 billion, up 25% year on year across all currencies. The market remains concentrated in core regions including the GCC, Malaysia, Indonesia, Turkiye and Pakistan, with sovereigns dominating issuance, alongside rising activity from banks, corporates, infrastructure and project finance.
Al Natoor said Fitch expects global sukuk issuance to sustain momentum in 2026, supported by continued growth in core markets and a rising share of emerging markets in global dollar debt issuance. While risks remain from evolving Sharia standards and geopolitical uncertainty, he noted that market fundamentals remain sound, with the majority of rated sukuk maintaining investment-grade profiles and no recorded sukuk defaults over the past four years.
Global outstanding sukuk crossed $1 trillion at end-2025, with sukuk share of total debt issuances rising across the regions.
