Dubai / Jakarta / Toronto: Fitch Ratings anticipates a vibrant UAE debt capital market (DCM) in 2025, and for it to grow to USD400 billion over the next few years. This growth will be propelled by funding diversification, upcoming debt maturities, infrastructure financing, regulatory reforms, and the Dirham Monetary Framework (DMF) implantation. A favourable funding environment, with projected lower US Federal Reserve interest rates in 2025, and declining oil prices could further stimulate the diverse DCM. Nasdaq Dubai continues to be a key global listing venue for sukuk.

"After surpassing USD300 billion and up just over 10% from last year, the UAE DCM is on track to reach USD400 billion, driven by strategic diversification and reforms," said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings. "The UAE continues to be a key part of the global sukuk landscape, with 92% of its sukuk being investment-grade, nearly all of its sukuk issuers on Stable Outlooks. No defaults in 2024 highlight the market stability, supported by the evolving Dirham Monetary Framework and favourable funding conditions."

The UAE was the third-largest dollar debt issuer in emerging markets (excluding China) and second-largest DCM among GCC countries in 2024. It is among the most developed DCMs within the Organisation of Islamic Cooperation (OIC) countries, and is a significant global sukuk issuer and investor.

Sukuk made up 20.8% of dollar issuances in 2024, followed by ESG issuance (17.2%). The dirham’s share of the DCM rose to 23% by end-2024 (2020: 0.5%). The UAE’s consolidated debt is stable. We expect UAE banks to continue being key debt issuers and investors.

However, challenges persist. The DCM investor base is concentrated in banks. Dirham issuance by corporates and banks are rare. Many large corporates are starting to issue debt, but the funding culture remains bank-focused. Sharia complexities, including AAOIFI Standard 62, pose risks for sukuk.

Matt Pearson
Senior Associate, Corporate Communications
Fitch Group, 30 North Colonnade, London, E14 5GN
E: matthew.pearson@thefitchgroup.com