Global Sukuk Market Shows Strong Start to 2026 After Record 2025 Issuance

Global sukuk markets entered 2026 with solid fundamentals, as the instruments continue to play a key role in emerging market financing following record issuance of around $300 billion last year, according to Fitch Ratings.

Sukuk issuance rose 25 percent in 2025, driven by sustained activity in Gulf Cooperation Council (GCC) countries and increased participation from banks, corporates, and infrastructure and project finance issuers. The growth reflects the market’s diversification, with both sovereigns and private sector participants contributing to the surge. Fitch expects the momentum to carry into 2026, supported by refinancing needs, upcoming maturities, and strategies to diversify funding sources.

Sukuk are Shariah-compliant financial instruments that provide investors with partial ownership of an issuer’s underlying assets, offering an alternative to conventional bonds. In 2025, sovereign issuers dominated the market, while banks and corporate entities expanded their involvement.

Bashar Al-Natoor, Fitch’s global head of Islamic Finance, said, “We expect global sukuk issuance to sustain momentum in 2026, with continued growth in the core markets and a rising share in emerging markets, which accounted for about 16 percent of all US dollar debt capital market issuance in 2025, excluding China.” He added that geopolitical tensions and evolving Sharia standards present potential risks, but overall market fundamentals remain sound, backed by a broadly strong credit profile.

By the end of 2025, global outstanding sukuk exceeded $1 trillion. The GCC held the largest share of outstanding sukuk at 41 percent, followed by ASEAN countries at 16 percent and Turkiye at 8 percent. About 82.5 percent of rated sukuk were investment grade, and 90.5 percent of issuers carried Stable Outlooks. No sukuk defaults were recorded over the past four years.

The report also highlighted the global expansion of the market. Frontier economies such as Egypt, Jordan, and Sri Lanka accessed the sukuk market in 2025, with Egypt emerging as a regular issuer and most of its dollar issuance taking the sukuk form. Other new entrants included Algeria, Tunisia, Malta, and the Philippines.

Fitch noted that the implementation of the Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI) Shariah Standard 62 is still incomplete. The standard aims to harmonize sukuk practices, covering asset backing, ownership transfer, and trading procedures. In April 2025, AAOIFI’s Shariah board said it was reviewing feedback from the industry and planning amendments, but no completion timeline was provided.

The report also highlighted new GCC sukuk terms allowing trustees to register asset titles in their name in the event of a default, strengthening investor protection. Fitch said these developments reflect a growing maturity in the sukuk market and its expanding role in global Islamic finance.