The liquidity levels of most Fitch-rated sukuk are close to pre-war levels despite continuous geopolitical tension, Fitch Ratings says. Sukuk liquidity has not yet returned to the pre-war levels recorded in January, but average sukuk Liquidity in August has been the highest since the onset of the conflict.
Liquidity is likely to remain constrained as long as the geopolitical tensions persist. Liquidity improvements vary by credit ratings, countries, sectors, currencies, and sensitivity to geopolitical risk. Investment-grade sukuk have higher liquidity scores than non-investment-grade sukuk.
Fitch assesses liquidity using Bloomberg’s Liquidity Assessment (LQA) scores. The scores indicate security-level liquidity and range from 1 to 100. A score of 100 is assigned to securities with the lowest liquidation costs within an asset class, while securities with the highest costs are assigned a score of 1. LQA is a data-driven model that produces a daily security-specific liquidity surface that captures the relationship between volume, cost and time. Fitch’s analysis excludes sukuk with local ratings and those without an LQA score.
Just over 75% of Fitch-rated sukuk had a liquidity score above 50 on 4 August. This has increased (23 March: 64%) but is still slightly below the 81% in January. The median liquidity score across Fitch-rated sukuk (excluding local ratings) was 64 as of 4 August, an improvement from the trough of 55 on 23 March, but still below the pre-war level of 68.
Fitch-rated investment-grade sukuk had an average liquidity score of 69 on 4 August (March: 64; January: 72), considerably above the 40 for non-investment-grade sukuk (March: 33; January 2026: 48). Sukuk in the ‘A’ rating category recorded the strongest liquidity improvement between July and August.
Fitch-rated sukuk from Hong Kong, Malaysia, Indonesia and Egypt, and supranationals, had the highest liquidity scores. Sukuk from Egypt, Oman, Malaysia and Ireland surpassed their pre-war liquidity scores in August, with Egypt being a notable 11 points above pre-war levels.
Liquidity was varied within the outstanding GCC US dollar markets as of 12 August. Sukuk and bonds in US dollars both had average liquidity scores of around 50. Sukuk were more liquid than bonds across all currencies, with an average liquidity score of 57 versus 53. Excluding US dollar outstanding widened this gap further, as sukuk liquidity rose to 68 while bonds only rose to 57. On an all-currency basis, sukuk outperformed bonds in Oman, Bahrain, and Saudi Arabia. However, bonds and sukuk had identical liquidity scores in Qatar and in the UAE, whereas Kuwaiti bonds were more liquid than sukuk.
By currency, Fitch-rated Malaysian ringgit-denominated sukuk had the highest liquidity score in August. This was the only currency to surpass pre-war liquidity levels, reflecting the depth of the Malaysian domestic investor base. Euro-denominated sukuk were also highly liquid, while US dollar-denominated sukuk have been recovering more gradually, nearing pre-war levels in some cases.
Fitch-rated asset-backed securities are the only sector to have surpassed pre-war liquidity levels. Financial institutions had the second-strongest recovery, followed by sovereigns, supranationals, infrastructure and project finance, and corporates and others. International public finance was the weakest.
