Saudi Arabia’s Debt Capital Market Set to Hit $600 Billion in 2026

A report published this week by Fitch Ratings showed that Saudi Arabia’s outstanding debt surpassed $520 billion in 2025, marking an annual increase of 21 percent. Sukuk, Shariah-compliant financial instruments, accounted for approximately 62 percent of the total, highlighting the Kingdom’s growing prominence in Islamic finance.

Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings, said that the expansion is driven by cross-sector financing needs, fiscal deficits, regulatory initiatives, and expectations of lower oil prices and interest rates. “Saudi Arabia’s debt capital market is likely to reach $600 billion outstanding in 2026,” he noted. Al-Natoor added that almost all Fitch-rated Saudi sukuk carry investment-grade ratings, with issuers on Stable Outlooks and no defaults. Reforms have also increased foreign investor participation, which now exceeds 10 percent of the government’s domestic primary issuance.

Dollar-denominated debt issuance surged by 49 percent in 2025, reaching around $100 billion, with sukuk growth outpacing traditional bonds. Among emerging markets excluding China, Saudi Arabia was the largest US dollar-debt issuer last year, holding an 18 percent share. The Kingdom also led in environmental, social and governance (ESG) dollar-debt issuance, accounting for more than 26 percent of the total.

Fitch highlighted rising subordinated sukuk issuance by banks and noted that access to both Saudi riyal and US dollar markets has provided benefits amid tighter local liquidity. “This is supported by no additional currency risk, and established access to foreign investors,” the report said.

Saudi Arabia’s annual borrowing plan, approved by the National Debt Management Center, aims to source up to 50 percent of sovereign funding needs from private markets, 25 to 30 percent from international debt capital markets, and 20 to 30 percent from domestic debt capital markets. The report also noted that alternative funding channels, including syndicated financing and certificates of deposit for banks, are expected to remain prominent.

Fitch warned that the Kingdom’s debt market remains sensitive to oil price fluctuations, interest rate volatility, evolving Shariah requirements for sukuk, and geopolitical risks, all of which could influence fiscal balances, funding costs, and investor sentiment.

A separate Fitch report earlier this month showed that global sukuk issuance reached $300 billion in 2025, up 25 percent from the previous year, driven by steady offerings in Gulf Cooperation Council countries. The report added that this growth trend is likely to continue in 2026, supported by refinancing activity, upcoming maturities, and efforts to diversify funding sources across sovereign, bank, and corporate issuers.

The findings underscore Saudi Arabia’s rising influence in global debt markets and its role as a leading issuer of US dollar-denominated and Shariah-compliant financial instruments among emerging economies.