Global Sukuk Issuance Reach $80 Billion in Q3

The core markets issued about $80 billion of sukuk in the third quarter of this year, making this the most active third quarter yet for issuance volumes, according to major international credit rating agency Fitch Ratings.

This is despite new sharia requirements, geopolitical events in the Middle East, summer holidays, trade war uncertainties, interest and foreign exchange rates, and commodity price volatilities, the agency said.

However, bond issuance in core markets declined by 17.6% from the second quarter (including multilaterals; all currencies). Global sukuk issuances have been strong so far in the fourth quarter, and with a healthy pipeline.

Global Head of Islamic Finance at Fitch Ratings Bashar Al Natoor said that 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.

“Risks persist from new sharia requirements, geopolitics and market volatility, but fundamentals are solid. About 80% of Fitch-rated sukuk are investment grade, with no defaults or fallen angels in the third quarter,” Bashar said.

Sukuk is rising in significance in emerging markets, with a growing share of outstanding debt capital markets in the GCC (40%) and ASEAN (16%). Global outstanding sukuk crossed $1 trillion. Sukuk share exceeded 35% of total debt capital market issuances in the core markets of the GCC, Malaysia, Indonesia, Turkiye and Pakistan in the third quarter as against 27.5% in 2024.

Malaysia Is Largest Sukuk Issuer

Malaysia accounted for the largest share of outstanding sukuk issuances with 34%, closely followed by Saudi Arabia with 30%. Outside the GCC, Indonesia, Malaysia, and Turkey together accounted for 64% of global issuance during the quarter. In the GCC, sukuk now make up 40% of outstanding debt instruments compared to 16% in emerging markets.

ESG-linked sukuk represented 13% of USD-denominated issues, alongside a rising share of subordinated instruments.

According to media reports, the agency’s base case assumes oil at $70 per barrel this year and $65 in 2026, though it added that price shocks and new shariah requirements could pose downside risks.

In regulatory developments, the UAE central bank’s Higher Sharia Authority issued a resolution on the sale of rights in H1 of 2025. Many GCC sukuk issuers added terms in the documentation authorising trustees, upon obligor default, to register asset titles in the trustee’s name.

Fitch does not deem this sufficient to treat an unsecured sukuk as secured, or higher ranking than an obligor’s existing debt, due to the lack of precedents, uncertainties and complexities related to legal framework and regulations, and the obligor’s willingness and ability to register. Fitch could reassess this assumption on a case-by-case basis.