The UAE’s sukuk and bond markets continued to grow at a steady pace in 1Q 2025, with total outstanding issuances rising 8.3% y-o-y to USD 309.4 bn, state news agency Wam reports, citing Bashar Al Natoor, global head of Fitch Ratings’ Islamic Finance Group.

Sukuk are gaining ground: Islamic finance instruments accounted for 20.2% of total outstanding debt in the UAE, while conventional bonds made up the remainder. Sukuk issuances in 1Q doubled q-o-q to USD 4.9 bn. Bond issuances for the same period came in at USD 24.1 bn.

A major player globally: The UAE now holds a 6.5% share of total global sukuk outstanding, ranking fourth worldwide behind Malaysia, Saudi Arabia, and Indonesia, Al Natoor said. It’s also one of the largest issuers of USD-denominated debt in emerging markets, accounting for 7% of such issuances (excluding China) in 1Q — behind only Saudi Arabia, Brazil, and Mexico — he added.

Sustainability-linked issuances on the rise: The UAE ranked third among emerging markets

(also excluding China) in ESG-linked sukuk and bond issuances in 1Q, trailing Turkey and the Philippines. The country led the GCC in green finance issuances last year, with USD 3.2 bn worth of issuances. This was partly supported by the extension of a fee exemption for listing ESG-linked sukuk and bonds in April 2024, part of broader efforts to support sustainability initiatives in financial markets.

Regionally strong: The total value of outstanding sukuk and bonds across the GCC reached USD 1.03 tn by the end of March, with the UAE claiming the second-largest share at 30%, he highlighted, adding that, the country also held 15.6% of total outstanding sukuk in the region.

Credit quality holding steady: Fitch currently rates USD 27.1 bn worth of sukuk issued from the UAE, with 91.9% of those instruments holding investment-grade ratings, Al Natoor noted. Some 39.5% are rated A, 35.6% BBB, and 16.8% AA, with a stable outlook across the board, he said.

Issuances are expected to remain robust for the remainder of the year, with total outstanding debt projected to hit USD 400 bn within the next few years, Al-Natoor said, attributing the continued growth to efforts to diversify funding sources, upcoming maturities, infrastructure financing, and ongoing regulatory reforms.

Tags: