Sukuk is now the dominant force in the UAE’s debt market: For the first time on record, Islamic issuance accounted for 50% of all USD debt raised in the UAE last year, according to a Fitch Ratings report seen by EnterpriseAM, marking a structural shift in how the country raises capital.

The trend: USD sukuk volumes surged 130% in 2025, while conventional bond issuance declined 36%. The UAE is now the world’s second-largest issuer of USD sukuk, and Nasdaq Dubai hosts nearly a third (31%) of the global market. This surge helped push the UAE’s total outstanding debt to USD 325 bn (up 9.3%). Fitch sees the market crossing the USD 350 bn mark next year.

Credit quality is rock solid: Despite the volume growth, standards haven’t slipped. Over 85% of rated sukuk remain investment-grade, and there were zero defaults in 2025.

The AED debt lag continues: While AED debt grew 13% to nearly USD 78 bn, the market is still skewed. Sovereign issuance dominates, while banks and corporates rarely tap the market — meaning a true local corporate bond market remains theoretical.

The green split: ESG debt is growing (with outstanding ESG debt up 18.6% to USD 29 bn), but the composition is changing. Conventional ESG bonds fell by nearly 60%, while ESG sukuk jumped 50%, further cementing the Islamic takeover of the market.

The bigger picture

Debt capital markets grew to over USD 325 bn last year, and are expected to grow to USD 350 bn this year, according to Fitch. Lower oil prices (USD 63 / bbl during 2026-27) and Fed rate cuts are expected to keep issuance windows open through 2026, though geopolitical risk remains the primary spoiler.

What to watch

One player eyeing sukuk markets soon: ADX-listed Burjeel Holdings, whose board of directors approved the establishment of a multi-tranche USD 1.5 bn sukuk program, it said in a bourse filing (pdf).

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