Fitch-rated sukuk surpasses $210bn as market expands 16%

08/08/2025 02:39 AST

The value of sukuk rated by Fitch Ratings exceeded $210 billion in the first half of 2025, marking a 16 percent increase from a year earlier, as demand for Shariah-compliant debt continues to accelerate across global markets.

In its latest Islamic finance report, Fitch said that 80 percent of its rated sukuk maintain investment-grade status with no recorded defaults, highlighting the relative stability and creditworthiness of issuers despite tightening global financial conditions.

The US dollar remained the dominant issuance currency, accounting for over 90 percent of rated sukuk, followed by the Malaysian ringgit at 6.2 percent.

Fitch currently rates more than 255 sukuk and 95 programs, representing over 70 percent of the outstanding global US dollar-denominated sukuk market.

Earlier this month, a report by Kuwait Financial Center, also known as Markaz, echoed similar views, stating that US dollar-denominated instruments dominated the Gulf Cooperation Council debt market in the first half of 2025, raising $73.1 billion through 146 issuances - representing 79.4 percent of total value.

Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings, said: "Most Fitch-rated sukuk rank senior unsecured and hold international long-term ratings with about 87 percent of sukuk issuers having a stable outlook."

He added: "Over 90 percent of rated sukuk are US dollar-denominated and are largely characterised by bullet and fixed-rate structures. Medium-term sukuk with tenors between three to 10 years dominate, comprising over 81 percent of all rated sukuk."

Sukuk rated in the "A" category made up the largest share at 39 percent, followed by 25 percent in the "BBB" category and 13 percent in "BB."

Fitch also noted that 11 percent of all rated sukuk are considered long-term, with maturities exceeding 10 years, while only 7 percent have tenors shorter than three years. Most of these instruments are expected to mature by 2030.

Environmental, social, and governance sukuk are also gaining traction, now accounting for 12 percent of all Fitch-rated sukuk outstanding, with a total value of $25 billion.

Most ESG sukuk are dual-listed on major exchanges such as the London Stock Exchange, Nasdaq Dubai, and Euronext, reflecting their appeal to a broad international investor base.

The analysis further highlighted increasing regional and sectoral diversification. The Middle East continues to lead with a 69.9 percent share of rated sukuk as of end of the first half, followed by Asia at 21.6 percent and Europe at 7.3 percent.

Affirming the growth of the Middle East's debt markets, Fitch noted in December that total outstanding debt in the GCC region surpassed the $1 trillion mark.

Also in December, Kamco Invest projected that Saudi Arabia would lead the region in bond maturities over the next five years, with around $168 billion in Saudi bonds expected to mature between 2025 and 2029 - underscoring the Kingdom's growing prominence in regional debt markets.

In its latest report, Fitch added that sovereign and supranational issuers still account for more than half of the rated sukuk market. However, issuer diversity is increasing, with sizeable contributions from financial institutions, corporates, international public finance, infrastructure and project finance, as well as structured finance.

Arab News