Saudi Arabia led sustainable sukuk issuances in the GCC during 1H 2024, accounting for 42% of the region’s issuances, followed by the UAE at 33%, Zawya reports citing a report by credit ratings agency Moody’s.

Among this year’s sustainable sukuk offerings: Riyad Bank announced earlier this week that it is lining up a USD-denominated additional Tier 1 (AT1) capital sustainable sukuk issuance, with the offering’s value and terms to be determined at a future date subject to market conditions. Meanwhile, Al Rajhi Bank launched a USD 1 bn AT1 sustainable sukuk in May and Saudi National Bank (SNB) received orders worth USD 4.1 bn in February after kicking off sales for a five-year USD-denominated sustainable sukuk.

The global pie: GCC countries contributed 82% of global sustainable sukuk issuance in 1H 2024, with total issuance rising 21% y-o-y to USD 6.8 bn. Saudi entities accounted for 33% of the global cumulative sustainable sukuk volume from 2015 to 1H 2024, followed by Malaysia and UAE contributing 21% each.

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Sovereign sustainable sukuks on the horizon? Moody’s expects Saudi Arabia to issue its first government-backed sustainable sukuk in “the coming months,” after the government rolled out a new green financing framework back in March. Additionally, more private-sector financial firms are expected to enter the sustainable sukuk market in a bid to tap new categories of investors.

This is in line with what we had heard earlier this year: S&P Global pointed to Saudi and the UAE as the largest expected issuers of sovereign green bonds in the region in 2024. The trend is anticipated to be driven by government bodies and state-owned companies looking to meet net-zero targets.

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