Fitch flags soft sukuk liquidity

November 10, 2026 (MLN): Liquidity in Fitch-rated sukuk has held broadly steady since August 2026 but remains below the levels seen in January, before the Iran conflict, Fitch Ratings said.

The agency noted that liquidity differs widely by credit rating, country, sector, currency and tenor, with investment-grade sukuk more liquid than speculative-grade ones.

Fitch measures liquidity using Bloomberg’s Liquidity Assessment scores, which rate individual securities from 1 to 100.

A score of 100 goes to securities with the lowest liquidation costs within their asset class, and 1 to those with the highest.

The data-driven model builds a daily security-level liquidity surface linking volume, cost and time. Fitch excluded sukuk with local ratings from the analysis, and the scores are calculated by instrument count.

Investment-grade sukuk had an average score of 67 on November 2, against 69 on August 4, 64 on March 23 and 72 on January 30.

Non-investment-grade sukuk scored far lower at 35, compared with 40 in August, 33 in March and 48 in January.

Sukuk rated ‘AAA’ and ‘F1sf’ carry the highest liquidity scores, while those in the ‘A’ category saw the strongest improvement between October and November.

Across all rated sukuk, the average score stood at 62 in early November, about 12% above the March low of 55.

It was 62 on October 1, 64 in August and 68 in January. About 69% of Fitch-rated sukuk scored above 50 on November 2, up from a low of 64% on March 23 but well short of 81% in January.

The median score, excluding local ratings, was 61, up from 55 in March but below the pre-war level of 68. Fitch rates over 70% of global US dollar sukuk outstanding.

By geography, sukuk from Hong Kong, Malaysia, supranationals and Indonesia were the most liquid, with average scores between 69 and 95.

Among GCC countries, Saudi Arabia, Qatar and Kuwait led with an average of about 57.

That figure dipped briefly during the Houthi attacks in late October, and has since recovered but remains below January.

Turkish and Egyptian sukuk both score around 50, with Turkish paper slightly below its March level and Egyptian paper above it. ASEAN sukuk are on average more liquid than GCC sukuk.

By sector, asset-backed securities (ABS) sukuk were the most liquid and the only sector scoring above pre-conflict levels, followed by supranational and sovereign sukuk.

Sukuk from UAE real estate developers had the lowest liquidity in Fitch’s coverage. GCC investment-grade ESG sukuk had an average score similar to non-ESG investment-grade sukuk in November.

By currency, Malaysian ringgit sukuk stayed the most liquid and continued to trade above pre-conflict levels, while euro-denominated sukuk rose to about 81.

In the GCC, local-currency sukuk were more liquid than bonds. By tenor, sukuk maturing in under a year and those with maturities of 10 years or more were the most liquid.

Fitch said liquidity weakened during periods of heightened geopolitical volatility in the Middle East, especially in March, and expects it to stay sensitive to geopolitical tensions, higher interest rates and the shift of capital from emerging to developed markets.

The global sukuk market with a Bloomberg liquidity score exceeds $950bn in outstanding volume. About 84% of it scores above 50, while only 2.5% scores below 25.

The 85-90 band is the largest at 11.1% of the total, followed by the 55-60 band at 10.3%.

Copyright Mettis Link News