Global sukuk surpasses $1tn amid strong Q3 issuance: Fitch

18/04/1447 02:33 AST

Global sukuk outstanding crossed $1 trillion by the end of the third quarter of 2025, representing a 15.5 percent year-on-year increase, driven by steady Islamic investor demand and issuers' diversification needs, said Fitch Ratings.

In its latest dashboard, the credit rating agency revealed core markets issued about $80 billion of sukuk in the third quarter of 2025, making it the most active third quarter on record.

The surge occurred despite challenges including new Shariah requirements, geopolitical events in the Middle East, summer holidays, trade war uncertainties, and volatility in interest, foreign exchange, and commodity markets.

Bashar Al-Natoor, global head of Islamic Finance at Fitch Ratings, said: "Global sukuk issuance is likely to surpass 2024 this year due to lower rates, steady Islamic investor demand and issuers' funding and diversification needs, with 2026 prospects being promising."

He added: "Risks persist from new Shariah requirements, geopolitics and market volatility, but fundamentals are solid."

Sukuk, also known as Islamic bonds, are Shariah-compliant debt products that allow investors to gain partial ownership of an issuer's assets until maturity.

Al-Natoor noted that 80 percent of Fitch-rated sukuk are investment grade, with no defaults or fallen angels reported in the third quarter.

The report also highlighted that bond issuance in core markets declined by 17.6 percent compared with the previous quarter.

Sukuk continues to rise in significance in emerging markets, with a growing share of outstanding debt capital markets in the Gulf Cooperation Council region at 40 percent and across the Association of Southeast Asian Nations at 16 percent.

The agency further said that sukuk accounted for over 35 percent of total debt capital market issuances in core markets including the GCC, Malaysia, and Indonesia, as well as Turkiye, and Pakistan.

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

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.

The steady momentum of global sukuk markets underscores the expansion of debt markets in countries like Saudi Arabia, where domestic and international investors seek diversification and stable returns.

Saudi Arabia accounted for 18.9 percent of the $250 billion US dollar debt issuance in emerging markets excluding China during the first half of 2025, slightly higher than the 18.5 percent recorded during the first five months of 2024, when total issuance reached $200 billion.

Fitch said Saudi Arabia was followed by Brazil at 10.6 percent and the UAE at 8.7 percent of total issuances in the period.