Global sukuk issuance will likely decline in 2025 after 2024’s record amid lower sukuk refinancing needs of key sovereigns in GCC countries, particularly Saudi Arabia, Moody’s Rating said.

“We expect overall issuance activity to fall to around $210 to $220 billion in 2025,” the rating agency said.

However, issuance from the Indonesian and Turkish sovereigns will increase, partially offsetting slower Saudi Arabia issuance.

Companies and financial institutions may tap the market, increasing overall volumes if rates decline more than expected, Moody’s said.

In 2024, sukuk issuance increased by 21% to $242 billion due to higher-than-expected sovereign volumes in the GCC and Southeast Asia and large issuances by financial institutions in Saudi Arabia and the UAE.

“Saudi Arabia’s large liability management programme boosted overall issuance volumes during 2024,” the rating agency added.

In the GCC, overall sukuk volumes rose 42% year-on-year to $114.2 billion in 2024, while a 49% increase in long-term issuance was spread across sovereign, corporate and financial institutions, principally in Saudi Arabia and the UAE. 

Green and sustainable issuance declined 10.6% in 2024 to $9.5 billion. 

That said, green sukuk issuance activity nearly doubled in Saudi Arabia, which partly offset the decline in issuance in some other countries, including Malaysia and Indonesia where volumes fell 48%, Moody’s said.

(Editing by Seban Scaria seban.scaria@lseg.com)