Prices of comparable sukuk and bonds have maintained a robust correlation through 2025 and into early 2026, according to a new report by Fitch Ratings.

The analysis found that the historical pattern of the past seven years has largely continued, despite brief periods of market volatility. Average yield spreads between comparable instruments remained tighter for investment-grade issuers than for those in the speculative-grade category.

Fitch analysed the pricing of 54 pairs of sukuk and bonds issued by the same entities. The pool was dominated by investment-grade issuers at 85 per cent and featured heavy representation from the GCC. Saudi Arabia led the group at 44.4pc, followed by the UAE at 14.8pc, while Bahrain and Oman each accounted for 3.7pc of the entities studied.

The report highlighted a strong yield-to-maturity (YTM) correlation of 0.97 on a scale of 0 to 1 across all analysed cases in 2025, a consistency that matches the trend observed since 2019.

Fitch observed that sukuk yielded less on average than comparable bonds in 59pc of the cases analysed.

Additionally, yields were found to be matched in 15pc of the cases, while sukuk yielded higher than bonds in the remaining 26pc of instances. The YTM spreads between comparable instruments narrowed slightly in 2025, with the average spread tightening to -0.06pc, compared to -0.08pc in 2024.

The analysis offered a clear distinction between rating tiers, noting that investment-grade issuers saw minimal spreads averaging -0.05pc in 2025, backed by stable correlations.

In contrast, speculative-grade issuers experienced wider spreads and slightly lower long-term correlations of 0.95.

Fitch attributed these differences to deeper liquidity for investment-grade names. Conversely, speculative-grade issuers often face a more concentrated investor base and thinner secondary-market liquidity, which can lead to occasional price divergence.

The report noted that while sukuk structures are inherently more complex than traditional bonds, the pricing often reflects the same credit risk fundamentals.

However, sukuk prices may react more slowly to market developments due to the “buy-and-hold” nature of Islamic banks and other Sharia-compliant investors, an effect that is often more pronounced for speculative-grade issuers.

Regionally, the data remains highly positive as Fitch’s analysis of the S&P MENA Sukuk Index and the S&P MENA Bonds Index showed a near-perfect correlation of 0.99 over the five years leading into mid-January 2026.

On average, sukuk yields in the Mena region were 27 basis points lower than bond yields over the same period. Fitch stated it will continue to monitor these relationships as Sharia-compliance requirements evolve and global geopolitical and macroeconomic conditions shift.

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