Global sukuk issuance to dip in Q3 after $1 trillion milestone
DUBAI, 8 hours, 40 minutes ago
Global sukuk issuance is likely to slow in the third qaurter with seasonal summer trends in key issuing markets, following a strong first half where global volumes surpassed the $1 trillion milestone for the first time, according to Fitch Ratings.
The sukuk market’s credit profile “remained broadly robust, despite a period of geopolitical conflict in the Middle East, as 80% of Fitch-rated sukuk are investment grade and 87% of issuers have a Stable Outlook, stated Fitch in the 'Global Sukuk Monitor 1H25' report.
On the issuance side, after a brief pause, sukuk rebounded swiftly as tensions eased,” says Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings. Issuance is likely to pick up again in 4Q25, “on rising Islamic investor demand, funding diversification, refinancing, budget needs and government support for Islamic finance growth.”
The Accounting and Auditing Organization for Islamic Financial Institutions is revising the draft shariah standard no. 62, with few regulators already addressing the sukuk asset registration requirements.
The UAE central bank’s Higher Sharia Authority (HSA) issued a resolution on the sale of rights over tangible assets with no requirement to register, which is likely to maintain market stability.
Ras Al Khaimah’s recently issued sukuk (rated ‘A+’) had a registration exemption for real-estate ijara assets by decree, as promulgated by the HSA, stated the top ratings agency.
According to Fitch, sukuk penetration in emerging markets (EM) is rising, at over 16.5% of all EM US dollar debt issued in Q2 (excluding China; versus 2024: 12%).
Recent landmark issuance included the largest-ever ‘AA’ rated corporate sukuk issued by ADNOC Murban RSC, Egypt returning to the sukuk market (rated ‘B’), and Jordan’s debut dollar sovereign sukuk (sukuk unrated).
GCC Islamic and conventional banks remain crucial as both issuers and investors, with ample liquidity. A few UAE banks started offering fractional sukuk, enabling greater retail participation.
Lower oil prices (2025F: $70/bbl; 2026F: $65/bbl) may encourage GCC sukuk and bond issuance. The anticipated single US Federal Reserve rate cut in 4Q25 (2025F: 4.25%; 2026F: 3.5%) could boost issuance. However, risks remain such as new sharia requirements, geopolitical escalations and oil-price shocks.-TradeArabia News Service
