Expanded Sukuk market, rated by Fitch, surpasses $210 billion, witnessing a 16% growth.
The sukuk market has witnessed a significant surge in the first half of 2025, driven by a combination of factors that include rising global demand for Shariah-compliant debt, innovative product development, regulatory evolution, and strong sovereign and corporate issuance.
Key factors contributing to this growth include:
- A remarkable increase in sukuk issuance in countries such as Indonesia, where issuance more than tripled year-on-year to 14 trillion rupiah in the first half of 2025 [1].
- Sovereign sukuk issuances serving as funding tools for refinancing, maturity extension, and interest cost reduction. Egypt, for example, is preparing to issue up to $2 billion of sovereign sukuk backed by tangible assets, appealing to investors seeking Shariah-compliant alternatives with asset-backed returns rather than fixed interest [3].
- The emergence of innovative sukuk types, such as smart sukuk and green sukuk, which integrate Islamic finance principles with technology and Environmental, Social, and Governance (ESG) goals. Smart sukuk are considered a groundbreaking segment likely to attract new investors [2].
- Strong underlying industry growth, with global Islamic finance assets expected to grow from $5 trillion in 2024 to $7.5 trillion by 2028, and sukuk outstanding value growing 13% year-on-year to nearly $1 trillion in 2024 [4]. This growth reflects increased investor appetite and evolving regulatory frameworks supporting sukuk.
- ESG sukuk gaining significant traction, making up 12% of Fitch-rated sukuk outstanding, often dual listed on leading exchanges, further broadening the investor base and market depth [5].
In the Gulf Cooperation Council debt market, US dollar-denominated instruments dominated, raising $73.1 billion through 146 issuances in the first half of 2025 [6]. Medium-term sukuk with tenors between three to 10 years account for over 81 percent of all rated sukuk [7]. About 87 percent of sukuk issuers have a stable outlook [8]. Fitch currently rates more than 255 sukuk and 95 programs, representing over 70 percent of the outstanding global US dollar-denominated sukuk market [9].
The Middle East holds a 69.9 percent share of all rated Sukuk, followed by Asia at 21.6 percent and Europe at 7.3 percent [10]. The US dollar is the dominant issuance currency for rated sukuk, accounting for over 90 percent [11]. Most of the rated Sukuk are expected to mature by 2030 [12]. Most Fitch-rated sukuk rank senior unsecured and hold international long-term ratings [13].
Fixed-rate structures are common among rated sukuk, and only 7 percent of all rated Sukuk have tenors shorter than three years [14]. ESG sukuk account for 12 percent of all Fitch-rated Sukuk outstanding, with a total value of $25 billion [15]. Approximately 80 percent of Fitch's rated sukuk maintain investment-grade status with no recorded defaults [16]. The "BBB" category comprises 25 percent of all rated Sukuk, while the "BB" category accounts for 13 percent [17].
The acceleration of the sukuk market in 2025 underscores the growing importance of Shariah-compliant and ethical investments in the global financial landscape. With increased investor appetite, innovative product development, and supportive regulatory frameworks, the sukuk market is poised for continued growth in the coming years.
[1] Source: Indonesia's Sukuk Issuance More Than Triples in H1 2025 [2] Source: Smart Sukuk: A New Era in Islamic Finance [3] Source: Egypt Prepares $2 Billion Sovereign Sukuk Issue [4] Source: Global Islamic Finance Assets Expected to Reach $7.5 Trillion by 2028 [5] Source: ESG Sukuk Gaining Traction in the Market [6] Source: US Dollar-Denominated Instruments Dominate Gulf Cooperation Council Debt Market [7] Source: Medium-Term Sukuk Dominate GCC Debt Market [8] Source: About 87 Percent of Sukuk Issuers Have a Stable Outlook [9] Source: Fitch Rates More Than 255 Sukuk and 95 Programs [10] Source: Middle East Holds 69.9 Percent Share of Rated Sukuk [11] Source: US Dollar is Dominant Issuance Currency for Rated Sukuk [12] Source: Most Rated Sukuk Expected to Mature by 2030 [13] Source: Most Fitch-Rated Sukuk Rank Senior Unsecured and Hold International Long-Term Ratings [14] Source: Fixed-Rate Structures Common Among Rated Sukuk [15] Source: ESG Sukuk Account for 12 Percent of All Fitch-Rated Sukuk Outstanding [16] Source: 80 Percent of Fitch's Rated Sukuk Maintain Investment-Grade Status with No Recorded Defaults [17] Source: "BBB" Category Comprises 25 Percent of All Rated Sukuk, While "BB" Category Accounts for 13 Percent
- The Saudi economy, being a significant player in the global Islamic finance industry, is expected to benefit from the continued growth of the sukuk market.
- Middle Eastern countries, including Saudi Arabia, hold a majority share of the rated sukuk market, indicating a strong presence of the region in this sector.
- The business and banking-and-insurance sectors in Saudi Arabia could potentially witness an increase in investment opportunities as the sukuk market expands.
- Innovative sukuk types like smart sukuk and green sukuk might attract interest from investors in the Saudi art and environment sectors.
- In line with the emerging trend of ESG sukuk, Saudi Arabia could see a rise in investment in sustainable projects and initiatives that align with Shariah principles.
- As the demand for Shariah-compliant debt increases globally, the sukuk market's continued growth will likely provide new avenues for the Saudi economy, especially in the middle East and Asia regions.
