Global Sukuk Market Surpasses $1 Trillion Amid Strong Investor Demand, Says Fitch Ratings

The global sukuk market has exceeded $1 trillion in outstanding value by the end of the third quarter of 2025, marking a 15.5 percent year-on-year increase, according to Fitch Ratings. The rise reflects sustained Islamic investor demand and issuers’ growing need for funding diversification, even amid challenging global economic conditions.

In its latest Sukuk Market Dashboard, the credit rating agency reported that core markets — including the Gulf Cooperation Council (GCC) region, Malaysia, Indonesia, Turkiye, and Pakistan — issued about $80 billion worth of sukuk during the third quarter of 2025. The figure represents the most active third quarter on record for Islamic finance.

Fitch said the robust growth came despite several headwinds, such as new Shariah compliance requirements, ongoing geopolitical tensions in the Middle East, trade disputes, and market volatility across interest rates, currencies, and commodities.

Bashar Al-Natoor, Global Head of Islamic Finance at Fitch Ratings, noted that the sukuk market’s resilience underscored its growing importance as a funding mechanism. “Global sukuk issuance is likely to surpass 2024 levels this year due to lower rates, steady Islamic investor demand, and issuers’ funding and diversification needs,” he said. “Prospects for 2026 also remain promising, although risks persist from new Shariah requirements, geopolitics, and market volatility.”

Sukuk, or Islamic bonds, are Shariah-compliant financial instruments that give investors partial ownership of an issuer’s assets until maturity, rather than interest-based returns. According to Fitch, around 80 percent of sukuk rated by the agency are investment grade, with no defaults or “fallen angels” recorded in the third quarter.

While sukuk issuance surged, traditional bond issuance in core markets declined by 17.6 percent compared with the previous quarter, highlighting a continued shift toward Islamic finance instruments.

Fitch also observed that sukuk now represent a significant share of total debt capital markets, accounting for over 35 percent of all issuances in key Islamic finance hubs such as the GCC, Malaysia, Indonesia, Turkiye, and Pakistan. Within the GCC alone, sukuk make up about 40 percent of outstanding debt, while in ASEAN markets, they represent roughly 16 percent.

The U.S. dollar remains the dominant currency for global sukuk, comprising over 90 percent of Fitch-rated issues, followed by the Malaysian ringgit at 6.2 percent.

The agency’s August report further revealed that the value of Fitch-rated sukuk surpassed $210 billion in the first half of 2025 — a 16 percent rise from the previous year — as global appetite for Shariah-compliant financing continues to strengthen.

Saudi Arabia remains a major driver of this growth, accounting for 18.9 percent of the $250 billion U.S. dollar debt issuance in emerging markets outside China during the first half of 2025. The kingdom was followed by Brazil with 10.6 percent and the UAE with 8.7 percent.

Fitch said the sustained expansion of the sukuk market underscores its increasing role in global finance, particularly in emerging economies seeking diversification, stability, and alignment with Islamic finance principles.