Global sukuk issuance is likely to extend its 3Q26 recovery on the back of cross-sector funding needs and sustained demand from Islamic investors, Fitch Ratings says.
The ratings agency expects a 25bp US Federal Reserve rate increase in December, which may also prompt entities to issue before funding costs rise. Sukuk is likely to retain its representation in emerging-market (EM) debt. Recent regulatory developments and initiatives in tokenisation, ESG, retail and RMBS sukuk could support market maturity.
“Global sukuk issuance has regained momentum in 3Q26, and we expect the pipeline to remain supportive through year-end,” said Bashar Al Natoor, Fitch’s Global Head of Islamic Finance. “However, geopolitical volatility and higher rates may weigh on market sentiment, along with issuers and investor appetite towards EM debt. Sukuk continue to show resilient credit quality overall, with over 80% of rated sukuk being investment grade and over 80% of issuers on Stable Outlooks.”
Sukuk reached 13% of EM US dollar debt issued in 3Q26, excluding China. Global sukuk outstanding exceeded USD1.1 trillion, concentrated in the GCC, Malaysia, Indonesia and Turkiye. Dollar sukuk issuance across core markets rose 58% quarter on quarter to USD25.5 billion in 3Q26, while dollar bond issuance fell 25.9%. African sukuk exceeded USD7 billion outstanding. The first Fitch-rated Indonesian rupiah sukuk default occurred.
Yield spreads between GCC investment-grade sukuk and US Treasuries have risen, reflecting a geopolitical risk premium and volatility in US Treasury yields and EMs.
The Saudi government intends to continue issuing sukuk in 2027. Kuwait issued a new sukuk law that could broaden access. The Malaysian government issued a USD1.5 billion sukuk after five years. Pakistan appointed an international banks consortium to execute a sukuk programme. The Philippines’ central bank issued a draft circular relaxing and incentivising sukuk issuance and investment. Egypt plans to issue its first tax sukuk.
