The UAE and Saudi Arabia are expected to continue leading the way with sustainable bond issuances in the Middle East in 2025, with total sustainable issuance in the region projected to range between USD 18-23 bn, according to an S&P Global report (pdf). The two countries accounted for more than half of last year’s issuances, which totaled USD 22.6 bn.

Renewable energy projects, especially solar, will dominate demand as GCC countries continue to prioritize energy efficiency and diversification from oil. Projects like sustainable water management, clean transport, and pollution control have also been popular in both Saudi Arabia and the UAE.

New types of bonds will also increase in popularity: Blue and transition bonds issuances are predicted to increase due to exposure to water scarcity and hydrocarbons. Sustainable sukuk will also continue to grow, S&P Global expects.

Despite dominating the market, UAE issuances declined amid post-cop normalization, S&P says: The UAE’s sustainable bond issuances declined by 28% y-o-y to reach USD 7.4 bn in 2024, as peak demand after cop28 in Dubai eased, along with a higher interest rate environment. Green bonds were the most popular, with around 60% of issuances focused on energy. Other prevalent sectors included logistics, real estate, and tourism and hospitality. Meanwhile, sustainable sukuk represented 30% of the UAE’s total sustainable issuances last year.

Financial institutions led issuances, driven by the UAE Banks Federation’s pledge to mobilize over AED 1 tn in sustainable finance by 2030. Corporates came in second.

Who were the top issuers last year? Dubai Islamic Bank issued USD 1 bn sustainable sukuk, followed by Taqa’s USD 850 mn green bond issuance, and First Abu Dhabi Bank’s USD 800 mn bonds. The Emirate of Sharjah issued the largest sustainable sovereign bonds in the UAE at USD 750 mn and USD 545 mn. The region’s only social bond was issued by the National Bank of Ras Al Khaimah, amounting to USD 600 mn. Beyond sovereign and banking issuances, the biggest sustainable issuances were Masdar’s USD 1 bn green bonds and Aldar’s USD 500 mn green sukuk.

The UAE has already had a busy start to the year with plenty of sustainable bond issuances: This year has seen lots of records: Aldar Properties secured the region’s largest sustainable loan for a real estate developer, with a AED 9 bn sustainability-linked revolving credit facility; and DP World listed the Middle East and North Africa’s first corporate blue bond on Nasdaq Dubai with a value of USD 100 mn. Ittihad International Investment also secured a USD 450 mn sustainability-linked revolving credit facility (RCF). Meanwhile, Dubai Islamic Bank (DIB) launched a sustainability-linked finance facilities framework, the first of its kind for any Islamic bank globally.

OTHER REGIONAL TRENDS WORTH NOTING-

  • Sustainable bonds represented 25% of total issuances done by regional corporate and financial institutions, compared with a 9% global average;
  • Financial institutions achieved a new sustainable issuance record of USD 12.6 bn in 2024, while sovereign sustainable issuances declined by 56% y-o-y to USD 1.7 bn;
  • The share of sustainable sukuk amounted to more than 35% of regional sustainable bond issuance in 2024, compared to 26% in 2023.
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