As per the leading global credit rating agency Fitch, Islamic syndicated financing, or the practice of raising a pool of funds from lenders, is outperforming traditional schemes in core markets. The Sharia-compliant syndications are on track to expand further in 2026, with the first three months of the year alone recording USD 23 billion in deals, surpassing dollar sukuk issuances (USD 20 billion) and rising by 294% from the 2025 tally.
“Islamic syndications also now make up half of all the syndication issuance in the Gulf Cooperation Council (GCC) region, marking a sharp growth from 35% in 2025. Geopolitical uncertainty is among the key drivers,” Fitch said.
It further stated that issuers are moving away from traditional sukuk and bonds, backed by US dollar, amid the geopolitical volatility. Conventional syndication issuances in core markets slumped by around 27% year-on-year to USD 32 billion, while dollar sukuk issuances, on a quarterly basis, went down by 9% to USD 20 billion.
“Syndications are also increasingly becoming a popular financing of choice due to their private nature and lower requirements compared to public issuances. Another key driver is ample liquidity and capital buffers of GCC lenders, which have remained accommodating despite the Middle East conflict,” Fitch noted.
“About 65% of Fitch-rated Islamic banks and multilaterals globally are investment-grade, while GCC Islamic banks in particular maintained significant domestic market share, ample liquidity and capital buffers going into the conflict,” said Bashar Al Natoor, Fitch’s Global Head of Islamic Finance, while interacting with Zawya.
Talking about Islamic syndicated financing, it is a type of arrangement that complies with Islamic law and involves multiple lenders providing funds to borrowers. Financial institutions use these arrangements to pool resources and share risk, all while being Shariah-compliant.
While about 65% of Fitch-rated Islamic banks and multilaterals have remained investment-grade till date, Gulf-based financial entities enjoy significant domestic market share, ample liquidity and capital buffers, an advantage that is also helping them to deal with the fallouts of the Iran war.