A new report from S&P Global Ratings predicts a rise in sukuk issuance for 2026, fueled by declining oil prices and increased financing requirements across several GCC nations. This growth is expected to be further supported by favorable economic conditions in key Islamic finance hubs and the anticipated continuation of interest rate cuts by the US Federal Reserve. S&P forecasts total issuance will reach between $270 billion and $280 billion, with a significant portion denominated in foreign currencies.
The market remained highly concentrated in 2025, with Saudi Arabia, the UAE, and Malaysia dominating the landscape. However, interest from new participants is growing; for instance, Egypt successfully entered the market last year by raising $2.5 billion. S&P anticipates more new issuers will join in 2026 as they look to broaden their investor base and find more affordable pricing compared to traditional bonds.
Last year saw global sukuk volume climb to nearly $265 billion, a notable increase from 2024. Saudi Arabia was a primary driver of this expansion, contributing over $72 billion to the total as banks within the Kingdom sought capital to fund Vision 2030 projects. Meanwhile, the UAE contributed over $22 billion, with much of that activity coming from Dubai’s real estate developers who are capitalizing on strong demand for new construction.
Despite the optimistic outlook, S&P warns of potential challenges. A significant escalation in geopolitical tensions remains a primary risk, as it could dampen investor enthusiasm for both sukuk and conventional bonds originating from the GCC region.
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