Fitch Ratings-Dubai/Toronto/Jakarta: Credit ratings, countries of risk, and sector type are having varying impacts on global sukuk and GCC debt capital market (DCM) liquidity amid the ongoing Iran war, Fitch Ratings says. In the short term, the impact on liquidity will depend on the scope and duration of the war. Longer-term effects will only become clear once the crisis ends and depending on how quickly investor confidence is restored.

Fitch assesses liquidity using Bloomberg’s Liquidity Assessment (LQA) scores. The scores indicate security-level liquidity and can range from 1 to 100, with 100 signifying the highest liquidity. A score of 100 is assigned to securities with the lowest liquidation costs within an asset class, while securities with the highest costs are assigned a score of 1. LQA is a data-driven model that produces a daily security-specific liquidity surface that captures the relationship between volume, cost, and time.

The LQA decline for investment-grade sukuk has been less severe than for speculative-grade sukuk on average. LQA scores have declined in most GCC DCMs since the war began, as well as for many sukuk issuers in Turkiye, Egypt and Indonesia. In contrast, many rated Malaysian, Omani and supranational sukuk have shown resilience in their LQA scores.

Sukuk in the ‘BB’ and ‘B’ categories have the lowest LQA scores among all Fitch-rated sukuk globally on average, with the steepest liquidity fall compared to other rating categories since the war began. Sukuk in the ‘F1sf’, ‘AAA’, ‘BBB’, ‘AA’, and ‘A’ categories held the highest liquidity of all rated sukuk, but also faced declines, except ‘F1sf’. By sector, corporates, infrastructure and project-finance sukuk had the lowest scores among all rated sukuk globally, with the steepest liquidity falls. Asset-backed, supranational and sovereign sukuk maintained the highest liquidity levels and had the lowest declines, except asset-backed sukuk whose scores increased.

Fitch also analysed liquidity for 52 comparable sukuk and bonds from the same issuers. Liquidity was broadly similar in 50% of cases, sukuk were less liquid than bonds in 31%, and more liquid in 19%.

GCC US dollar sukuk and GCC US dollar bonds have displayed broadly similar liquidity trends, with both declining since the war began. The average LQA score for GCC US dollar sukuk fell to 45 on 23 March from 56 at end-2025. The average score for GCC US dollar bonds dropped to 48 from 53 in the same timeframe.

About 64% of Fitch-rated sukuk had an LQA score above 50 on 23 March, down from 82% in January 2025 (excluding local ratings and sukuk without an LQA score). Investment-grade sukuk are generally more liquid, with an average score of 65 as of 23 March (January 2026: 73), compared to 33 for speculative-grade sukuk (January 2026: 48). Historically, GCC DCMs have rebounded fairly quickly when tensions eased following previous Middle East geopolitical episodes, but the impact this time will depend on the scale and duration of the war.

Fitch’s credit ratings do not directly address any risk other than credit-related risks. Ratings do not deal with the risk of a market-value loss on a rated security due to changes in interest rates, liquidity or other market considerations. The credit ratings are assigned to issuers or obligations and are an opinion on the ability of an entity or instrument to meet financial commitments in accordance with the terms of the investment.

Healthy liquidity, trading activity and diverse investor participation can help improve financing conditions for issuers and may support credit quality when underpinned by strong fundamentals. To date, no Fitch-rated GCC sukuk have defaulted, with about 84% rated investment-grade. However, a few sukuk issuers are currently on Rating Watch Negative.

Contact:
Bashar Al Natoor
Managing Director – Global Head of Islamic Finance
bashar.alnatoor@fitchratings.com
Fitch Ratings – Dubai Branch
Maze Tower, 18th Floor
Sheikh Zayed Road, P.O. Box 215584, Dubai, U.A.E.

Saif Shawqi, CFA, FRM
Director – Islamic Finance
saif.shawqi@fitchratings.com

Amjad Alkabra
Associate Director – Islamic Finance
amjad.alkabra@fitchratings.com

Muhammad Luthfi Bagja Aulia
Senior Analyst – Islamic Finance
muhammad.aulia@fitchratings.com

Media Relations: Shahd Alsheikh, Riyadh, Email: shahd.alsheikh@thefitchgroup.com
Matthew Pearson, London, Email: matthew.pearson@thefitchgroup.com

Additional information is available on www.fitchratings.com

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