Sukuk issuance in the main Islamic finance markets fell 36% year on year to US$125 billion in the first half of 2026, while global sukuk outstanding rose 11% to US$1.1 trillion, according to Fitch Ratings. Fitch expects full-year 2026 issuance to stay below 2025 levels, with recovery depending on stability in the Gulf, BusinessToday reported in July 2026.
About the report
Fitch Ratings publishes regular commentary on the global sukuk market through its Islamic finance team, led by Bashar Al Natoor, Global Head of Islamic Finance. The figures here come from Fitch’s mid-year review published in July 2026, covering the first half of 2026 (1H26) across the GCC, Malaysia, Indonesia, Türkiye and Pakistan. It is the most recent half-year review available as of October 2026.
Key findings
- Issuance down sharply: Fitch Ratings says sukuk issuance in the GCC, Malaysia, Indonesia, Türkiye and Pakistan fell 36% year on year to US$125 billion in 1H26.
- Bonds held steady: Over the same period, conventional bond issuance in those markets, including multilaterals, fell only 0.8%, so sukuk lost ground relative to bonds.
- Market still growing: Global sukuk outstanding rose 11% to US$1.1 trillion, because earlier issuance continues to sit on investors’ books.
- Dollar share: Sukuk made up 9% of US dollar debt issued in 1H26, excluding China.
- Credit quality: Just over 80% of Fitch-rated sukuk are investment grade, and there have been no sukuk defaults since 2021.
- Outlook weakening: The share of sukuk issuers on Stable Outlooks fell to 80% in 1H26.
Why did sukuk issuance fall?
The main reason is geopolitics. Issuance paused in March and April 2026, during the regional conflict involving Iran. The agency says recovery depends on whether the US-Iran ceasefire holds and turns into lasting regional stability, and that renewed escalation would weigh on growth.
Funding plans matter too. Saudi Arabia completed its funding plan early, so Fitch does not expect any new public external US dollar sovereign sukuk in the second half of 2026. Malaysia aims to bring federal government debt down to 60% of GDP or below by 2030, which Fitch expects to temper government sukuk issuance.
Which markets look more resilient?
Fitch expects Indonesia’s near-term sukuk issuance to stay resilient because of ongoing government funding needs. Sukuk should also remain a key funding source for the UAE government, whose consolidated debt Fitch expects to rise to 25% of GDP in 2026. Banks and corporates across markets are expected to issue opportunistically, picking moments when market conditions improve.
One detail favours issuers: in the GCC, investment-grade sukuk priced at lower yields than comparable bonds, which suggests steady demand from Islamic investors even in a weak period.
How does this fit with other 2026 forecasts?
The Fitch data matches the cautious tone of other mid-2026 outlooks. S&P Global Ratings expects overall Islamic finance growth to slow to between 5% and 10% in 2026, as covered in our summary of its 2026-2027 outlook. By contrast, backward-looking data for 2025 was strong: the ICD-LSEG Islamic Finance Development Report 2026 cites record sukuk issuance in 2025. The 1H26 drop is partly a fall from that high base.
What this means for issuers and investors
- For corporate issuers, a quieter sovereign calendar in the second half can leave more room and investor attention for corporate and bank sukuk, if regional conditions allow.
- For investors, the combination of high investment-grade share and no defaults since 2021 is a useful reference point, but the falling share of Stable Outlooks is a signal to watch individual issuers more closely.
- For market watchers in Africa and Asia, the slowdown is concentrated in the Gulf. Indonesia’s resilience shows that domestic funding needs, not only Gulf liquidity, can keep a sukuk market active.
This summary is for information only and is not investment advice.
Read the original: Fitch Ratings publishes its sukuk research at fitchratings.com. Some reports require a free account.
FAQ
Fitch Ratings puts global sukuk outstanding at USD 1.1 trillion at the end of the first half of 2026, up 11% year on year.
Mainly because of geopolitical tension in the Gulf, which paused issuance in March and April, along with completed or reduced sovereign funding plans in Saudi Arabia and Malaysia.
Fitch reports no sukuk defaults since 2021.
Fitch expects full-year 2026 issuance to remain below 2025 levels, with recovery depending on lasting stability in the region.
