RIYADH: Islamic syndicated financing is set to remain a key funding source in 2026 for Saudi Arabia and the UAE, due to its lower complexity compared to sukuks and bonds, according to an analysis.
In its latest report, Fitch Ratings stated that global Islamic syndicated financing expanded by about 16 percent year on year in 2025 to around $215 billion in outstanding amounts.
This financial instrument is a type of arrangement that complies with Islamic law and involves multiple lenders providing funds to a borrower. Financial institutions and banks utilize these arrangements to pool resources and share risk, all while adhering to Islamic finance principles.
“We expect vibrant activity in 2026 with key drivers such as Islamic banks’ growing funding role in many national banking systems, ease of requirements, speed, and the lower complexity of syndications than sukuk and bonds issuance,” said Fitch’s Global Head of Islamic Finance, Bashar Al-Natoor.
He further said that the growth of Islamic syndicate financing could be further accelerated by expected Fed rate cuts, lower oil prices, cross-sector financing needs, and funding diversification goals in core markets.
“Over 60 percent of Fitch-rated Islamic banks globally are investment-grade at end-2025, 90 percent on Stable Outlooks, with many involved in cross-border and domestic syndications,” added Al-Natoor.
The report revealed that the Kingdom held 34 percent of the global Islamic syndication outstanding by the end of 2025, followed by the UAE at 33 percent and Egypt at 8 percent.
The Saudi government aims to raise up to 50 percent of its 2026 sovereign funding requirements from private markets, including syndications.
Government-related entities in the UAE are central to development spending and are likely to take on more debt, including through syndicated financing.
Egypt continues to receive solid support from bilateral and multilateral lenders.
The report, however, cautioned that government measures to develop sukuk and debt capital markets in the Gulf Cooperation Council region, Egypt, ASEAN, and Turkiye, alongside the rise of funding channels such as non-bank financial institutions, certificates of deposit, and private credit, could slow Islamic syndications.
Fitch added that evolving and differing Shariah requirements, and geopolitical and market volatilities could affect the growth of Islamic syndicated financing.
In January, the Saudi Press Agency reported that the International Islamic Trade Finance Corp., a member of the Islamic Development Bank Group, topped the global rankings as the best Bookrunner and Mandated Lead Arranger in the 2025 Islamic syndicated finance deal rankings issued by Bloomberg and the London Stock Exchange Group Data & Analytics.
