The UAE and Saudi Arabia will continue to lead the Middle East’s sustainable bond issuance, which is forecast to hit around $20 billion to $25 billion this year, according to S&P Global.

The two countries already accounted for a combined 80% of sustainable bond issuance by value in 2025, driven by banks and sovereign green frameworks in Saudi Arabia and large corporates and "blue bond" initiatives in the UAE.

Aggressive economic diversification efforts in these two markets, coupled with strong government backing for net-zero targets and large-scale renewable projects, have fueled this robust activity.

Overall, the region has shown resilience despite a volatile global market, with issuance in 2025 rising by 3%, while global volumes dropped by 21%.

For this year’s growth, the key drivers will be sustainable sukuks, transition bonds and the growing interest in the so-called "blue bonds" that highlight water and ocean health.

Also likely to drive the growth are green projects, including renewable energy, green buildings and clean transportation; AI data centres and; new taxonomies and laws.

(Writing by Cleofe Maceda; editing by Brinda Darasha)