RIYADH: The UAE’s debt capital market grew 3 percent year on year to about $320 billion outstanding at the end of the first half of 2026, while US dollar debt issuance reached $24 billion, according to Fitch Ratings.
US dollar issuance during the six-month period was 40 percent higher than in the second half of 2025. Fitch expects the market to expand moderately over the remainder of 2026 and in 2027, supported by funding diversification, financing needs across sectors and regulatory reforms.
Fitch forecasts consolidated UAE government debt to rise to 25 percent of gross domestic product in 2026 from 22.7 percent in 2025, while banks and corporates are expected to continue issuing opportunistically.
The UAE’s debt-market expansion comes amid continued growth in Gulf capital markets, as governments and companies turn to bonds and sukuk to diversify funding sources and meet financing needs. The development also reflects broader efforts to deepen local debt markets and strengthen the region’s access to international investors.
Sukuk accounted for 21 percent of outstanding UAE debt at the end of June, while more than 70 percent of the market was denominated in US dollars.
Bashar Al-Natoor, Fitch’s global head of Islamic Finance, said: “UAE issuers have generally maintained market access so far in 2026 despite regional volatilities.”
He added: “Market diversity rose, with issuance such as the first dirham digitally native notes, sovereign retail sukuk, blue and green bonds, and certificates of deposits.”
Market resilience
Fitch said UAE issuers remained among the largest emerging-market issuers of US dollar bonds and sukuk during the first half despite regional volatility generated by the Iran war.
Some issuers moved to private placements and syndicated financing to meet their funding requirements during the disruption, while issuance in Emirati dirhams by entities outside the government remained limited.
More than 80 percent of UAE sukuk covered by Fitch were investment grade, with no defaults recorded. The proportion of sukuk issuers with stable outlooks, however, declined to 81 percent during the first half.
Liquidity in Fitch-rated UAE sukuk improved in August compared with March but remained below its pre-conflict level in January, the agency said. Fitch also placed Ras Al Khaimah and several corporate and sukuk issuers on Rating Watch Negative.
The near-term issuance trajectory will depend partly on regional stability. Fitch said improved conditions could produce a more favorable funding environment, while renewed escalation could weigh on market growth. The debt capital market is also sensitive to oil prices and interest-rate volatility.
Regional context
A July report from Kuwait Financial Centre, or Markaz, put total Gulf Cooperation Council bond and sukuk issuance at $102.69 billion during the first half, up 6.5 percent year on year.
The UAE was the GCC’s second-largest issuing market after Saudi Arabia, with entities raising $25.45 billion through 58 issuances, according to Markaz. That represented 24.8 percent of Gulf issuance but was 6.8 percent lower than in the corresponding period of 2025.
The Markaz figure is broader than Fitch’s $24 billion total because Markaz covers primary bond and sukuk issuance across currencies, while Fitch’s figure refers specifically to US dollar debt issuance by UAE issuers.
Separately, Nasdaq Dubai recorded 33 fixed-income listings worth $13.8 billion during the first half. Total outstanding debt listed on the exchange reached $141 billion, comprising $98.6 billion of sukuk and $42.4 billion of bonds.
