Islamic syndications surpass dollar sukuk

April 21, 2026 (MLN): Islamic syndicated financing is expected to continue gaining momentum through 2026, as issuers in key markets increasingly steer away from public US dollar sukuk and bond markets amid geopolitical tensions linked to the Iran conflict, according to a Fitch Ratings report.

The agency noted that Islamic syndications are becoming a more prominent funding source, supported by their private structure, lower issuance requirements, and strong backing from Gulf banking systems.

Fitch highlighted that in the first quarter of 2026, Islamic syndications in core markets including the GCC, Egypt, Indonesia, Malaysia, Türkiye, and Pakistan overtook US dollar sukuk issuance, while conventional syndication activity weakened.

Within the Gulf Cooperation Council, Islamic syndications accounted for roughly half of total syndication issuance in 1Q26, up from 35% in 2025.

According to Fitch’s Global Head of Islamic Finance, Bashar Al Natoor, syndications remain a stable and essential financing channel even during periods of market volatility.

He added that post-conflict conditions, funding needs, and investor access will continue to shape the trajectory of Islamic syndications over the long term.

Fitch also noted that around 65% of its rated Islamic banks and multilateral institutions globally are investment grade, with GCC Islamic banks maintaining strong domestic market share, liquidity, and capital buffers.

Islamic syndicated financing continues to support large-scale funding for infrastructure, energy, utilities, financial institutions, and sovereign projects.

Many borrowers are now combining Islamic and conventional tranches to broaden their investor base. Global outstanding Islamic syndications rose more than 26% year-on-year to $219bn at the end of 1Q26, mainly concentrated in Saudi Arabia, the UAE, and Egypt, with tenors ranging from one to 40 years.

In 1Q26 alone, issuance reached $23bn up 294% year-on-year while conventional syndications fell 27% year-on-year to $32bn.

Dollar sukuk issuance in core markets stood at about $20bn, down quarterly but still higher YoY.

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