Sukuk market strength carries into 2026

January 08, 2026 (MLN):  The global sukuk market has entered 2026 on strong footing and is expected to remain a vital funding source for emerging markets.

Sukuk issuance reached a record high in 2025, exceeding $300 billion across all currencies, an increase of 25% YoY, according to a new report by Fitch Ratings.

Sovereign issuers dominated the market, although issuance from banks, corporates, infrastructure and project finance entities continued to rise.

Fitch expects issuance momentum to continue in 2026, although activity in the first quarter may slow due to Ramadan.

The market remains heavily concentrated in the Gulf Cooperation Council (GCC) countries, as well as Malaysia, Indonesia, Türkiye and Pakistan.

Fitch estimates that sukuk accounted for around 16% of all US dollar-denominated debt capital market (DCM) issuance in emerging markets in 2025, excluding China, up from 12% in 2024.

“We expect global sukuk issuance to sustain momentum in 2026, supported by continued growth in core markets and a rising share in emerging markets,” said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings.

Despite potential risks from geopolitical tensions and evolving sharia standards, Fitch said market fundamentals remain solid.

About 82.5% of rated sukuk are investment-grade, while 90.5% of issuers carry Stable Outlooks. No sukuk defaults have been recorded over the past four years.

Outstanding global sukuk surpassed $1 trillion by the end of 2025. Sukuk’s share of total DCM outstanding remains high in the GCC (41%), ASEAN (16%) and Türkiye (8%).

Fitch noted it is closely monitoring the Maldives, where an unrated sukuk repayment due in April 2026 may prove challenging.

Sukuk now represent 6.6% of the J.P. Morgan Emerging Market Bond Index Global Diversified, supporting passive investment flows from global investors.

Fitch added that a weaker US dollar could boost foreign demand for local-currency sukuk in markets such as Malaysia, Indonesia and Türkiye.

In 2025, several new markets advanced their Islamic finance frameworks, with Algeria, Tunisia, Malta and the Philippines introducing sukuk regulations.

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