RIYADH: Global sukuk markets entered the new year with solid fundamentals, as the instrument is poised to remain a key funding tool in emerging markets after record issuance of about $300 billion in 2025, according to Fitch Ratings. 

Global sukuk issuance rose 25 percent last year, supported by steady activity across Gulf Cooperation Council countries, as well as increased participation from banks, corporates, infrastructure and project finance issuers.

The ratings agency said issuance momentum is expected to continue this year, supported by funding diversification strategies, upcoming maturities and refinancing needs across sovereigns, financial institutions and corporates. 

Sukuk are Shariah-compliant financial instruments that grant investors partial ownership in an issuer’s underlying assets and serve as an alternative to conventional bonds. 

The report said sukuk issuance in 2025 was dominated by sovereign issuers, alongside rising activity from banks, corporates, infrastructure and project finance. 

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 EMs (emerging markets) — at about 16 percent of all US dollar debt capital market issuance in 2025 excluding China.”  

He added: “Geopolitical tensions and shifting sharia standards may pose risks, but fundamentals remain sound, supported by the market’s broadly solid credit profile.” 

According to the report, global outstanding sukuk surpassed $1 trillion by the end of 2025. 

Sukuk’s share of debt capital markets outstanding was highest in the GCC at 41 percent, followed by ASEAN at 16 percent and Turkiye at 8 percent.  

About 82.5 percent of rated sukuk are investment grade, while 90.5 percent of issuers carry Stable Outlooks, with no sukuk defaults recorded over the past four years. 

Highlighting global expansion, Fitch said frontier markets such as Egypt, Jordan and Sri Lanka tapped the sukuk market in 2025. 

“Egypt is emerging as a regular issuer, with most 2025 dollar issuance in sukuk format. Algeria, Tunisia, Malta and the Philippines issued sukuk rules in 2025, paving the way for new market entrants,” added Fitch Ratings. 

The report noted that implementation of the Accounting and Auditing Organization for Islamic Financial Institutions’ Shariah Standard 62 remains unfinished, while new terms in some GCC sukuk documents allow trustees to register asset titles in their name following a default. 

In April 2025, AAOIFI said its Shariah board was in the process of amending the proposed Standard 62 after receiving industry feedback, without specifying a timeline for completion. 

The guideline aims to standardize various aspects of the sukuk market, including asset backing, ownership transfer and trading procedures.