Sukuk issuance is expected to increase in 2026 on the back of lower oil prices and higher financing needs in some GCC countries, S&P Global Ratings said in a new report. 

The demand will also be driven by supportive economic environments in core Islamic finance countries and by the US Federal Reserve’s likely continuation of monetary easing policies. 

“Overall, we expect issuance to reach $270-$280 billion, including foreign currency issuance of $100-$110 billion,” said the rating agency’s Islamic finance head Mohamed Damak.

In 2025, the sukuk market remained concentrated among a few issuers, with GCC countries - Saudi Arabia and the UAE - accounting for 45% of issuance volume, followed by Malaysia.

“While we do not expect this structure to change significantly, we have seen interest from new issuers, with some successfully entering the market, such as Egypt,” he added.

Last year, Cairo raised $2.5 billion in sukuk issuance.

S&P expects new issuers to tap the market in 2026 to further diversify their investor base and secure more competitive pricing than conventional bonds. 

Global sukuk issuance increased to $264.8 billion in 2025, up from $234.9 billion in 2024, underpinned by strong performance from Malaysia, Saudi Arabia, Turkey, the UAE and Bahrain.

Saudi Arabia was the second-largest contributor to 2025 growth, with $72.5 billion in sukuk issuance, including $38 billion in foreign currency, rising 35% from 2024.

Additionally, banks in the kingdom issued more than $15 billion in sukuk, including nearly $12 billion in foreign currency-denominated sukuk, to continue funding Vision 2030 initiatives.

The UAE contributed $22.1 billion in issuance, of which $19 billion was in foreign currency, S&P said.

Real estate developers, particularly in Dubai, were among the UAE’s top issuers as they sought funds to finance land acquisition and launch new construction projects amid favourable demand trends, Damak stated.

The report also highlighted downside risks to the outlook, including the possibility of a major spike in geopolitical risk, which could reduce investors’ appetite for sukuk and bond issuances from the GCC.

(Editing by Bindu Rai, bindu.rai@lseg.com)