“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.

The post Islamic syndicated financing rises amid Iran war, says Fitch appeared first on International Finance.

“We expect the war will affect the volume of sukuk issuance in 2026, with the extent of the decline dependent on the duration of hostilities and their impact on the GCC region’s real economy,” S&P said.

Detailing further, Mohamad Damak, S&P Global Ratings’ analyst, remarked, “Sukuk backed by industrial or commercial real estate, which represents 3% of the sukuk we rate, are most vulnerable. Should their assets be damaged in an attack, it could test the robustness of sukuk legal provisions for risk coverage.”

“We currently rate more than USD 180 billion in sukuk (programs and stand-alone issuances), with over 50% located in the GCC region,” he noted.

However, the top ratings agency did not see wider sukuk market issuance being significantly affected by the volatile Middle East situation. Total issuance reached USD 62.4 billion in Q1 2026, compared with USD 52.6 billion in the same period in 2025. The spike also included an uptick in foreign currency-denominated sukuk, which reached almost 20% over the same period.

In GCC countries, S&P Global Ratings observed a slight increase in overall issuances, though there was a decline in those denominated in foreign currency.

“We expect this slowdown to continue until the war concludes and its implications for GCC economies and sukuk issues become clearer. The war may also bring some risks unique to sukuk, relating to their underlying assets,” mentioned Damak, while interacting with TradeArabia.

“The new S&P report identified the potential for total loss events (TLE) and partial loss events (PLE), specifically physical destruction of or damage to assets, and the sponsor’s ability to meet contractual obligations,” he added.

Rated sukuk issued by financial institutions typically exclude TLE/PLE risk, as these get embedded at the level of the underlying asset, with their materialisation typically disqualifying the assets from the eligible pool.

Stating that an increased probability of TLE/PLE coupled with uncertainty regarding sponsor payments could lead to negative rating actions, Damak concluded, “S&P Global Ratings will continue to monitor the risks of physical destruction of assets and the credit impact on a case-by-case basis.”

The post S&P Global Ratings sees sukuk issuance dip tied to Middle East conflict appeared first on International Finance.

According to the industry body, while Malaysia’s economic fundamentals remain sound, geopolitical tensions may have indirect spillover effects through higher energy prices, market volatility and potential disruptions to trade and supply chains.

“These could impact business costs, inflation, and cash flows for certain segments of the economy. The Islamic banking industry remains vigilant and ready to respond to these evolving risks,” AIBIM said, while adding that the industry players are also advancing value-based intermediation (VBI) to deliver sustainable and inclusive outcomes.

Talking about the health of Malaysia’s Islamic finance sector, as per Bank Negara Malaysia (BNM), in its 2025 annual report, noted that Islamic financial assets in the Southeast Asian country have more than doubled from USD 468 billion in 2014 to USD 954 billion in 2024, with regional peers like Singapore and the Philippines also experiencing notable growth.

According to the BNM report, building on its strong domestic foundation, Malaysia has emerged as a regional leader in Islamic finance, expanding services, fostering innovation, and supporting cross-border growth. Last year, nine participants from ASEAN used the country’s commodity trading platform, Bursa Suq Al-Sila, completing transactions valued at RM55.9 billion for the year. In fact, in Malaysia and Indonesia, sukuk has been widely used to fund the development of various infrastructure projects and green initiatives.

“More recently, Islamic finance has increasingly been channelled toward green and transition-related activities. Indonesia and Malaysia collectively contributed 45% share of the global sustainable and responsible investment and environmental, social, and governance (ESG) sukuk outstanding in 2024. This reinforces the sector’s alignment with broader ESG objectives and strengthens its role as a catalyst for sustainable development,” BNM said.

The central bank also noted that by September 2025, Malaysian players captured 82% of Asean’s Islamic banking assets, while dominating the takaful and retakaful segments with a massive 91% share. The Southeast Asian country also accounts for about 75% of total outstanding sukuk in ASEAN.

“Beyond financing, Islamic finance also plays an important role in promoting inclusive wealth distribution through instruments such as zakat, waqf and sadaqah. In Indonesia, for instance, innovative instruments like cash waqf-linked sukuk and deposits enable individuals to channel funds into social, humanitarian, and public projects,” the report noted.

“Malaysia, meanwhile, has actively leveraged a blended financing initiative known as iTekad to support entrepreneurial activities by combining banks’ financing with zakat‑based seed capital, further reinforced by capacity‑building programmes and skills training. As these communities expand their income‑generating activities, they evolve from recipients to economic contributors who help uplift others. As a result, this creates pathways for more inclusive and sustainable growth within the economy,” it concluded.

The post Malaysia’s Islamic finance landscape remains resilient: AIBIM appeared first on International Finance.

According to Qatar Central Bank’s data, the Sukuk’s maturity periods varied as follows: QR1.5 billion (an addition to an existing issuance) with a maturity date of January 16, 2029, and a yield of 4.5%, and QR1.5 billion (an addition to an existing issuance) with a maturity date of August 24, 2030, and a yield of 4.5%.

In a post on X (formerly Twitter), the bank clarified that total bids for the Sukuk reached approximately QR8 billion. The central financial institution also unveiled support measures for banks in response to Iranian attacks that severely weakened the Gulf’s third-largest economy.

The central bank will now offer unlimited local currency repurchase facilities against eligible securities held by local banks in order to ensure deep liquidity in the local market. This new facility offers maturities of up to three months, enabling Qatari banks to manage cash flow with greater certainty amid the ongoing volatility.

The industry’s senior executives, while interacting with The Banker, also said that Qatar Central Bank would reduce the reserve requirement on deposits from 4.5% to 3.5%, releasing further liquidity into the system. The central bank has been quizzing lenders about their liquidity in past weeks.

Qatar’s economy has been among the worst affected by the ongoing Middle East conflict. An attack from Iran on the Gulf country’s Ras Laffan liquefied natural gas (LNG) production hub knocked out 17% of the nation’s energy export capacity, in addition to creating an estimated annual revenue loss worth USD 20 billion, which may span for the next three to five years.

However, Qatar Central Bank has been proactive in ensuring the banking and finance industry doesn’t feel the heat. It has already permitted banks to offer borrowers the option to defer loan principal and interest payments for a period of up to three months, in accordance with lenders’ existing internal policies and supervisory guidance.

Analysis from S&P Global Ratings projected Qatar and Bahrain as the most vulnerable in the Gulf region to external outflows of foreign and local funding. However, for Qatar, the government has a proven record of supporting both the Islamic banking and the wider finance sector.

“Liquidity continues to be strong, capital levels significantly exceed regulatory requirements, and provisioning provides strong coverage against credit risk. Banks continue to hold substantial liquidity in both domestic and foreign currency, and resources are sufficient to meet customer demand, support normal market activity, and meet any short-term funding pressures under stressed conditions,” QCB said while reacting to the S&P report.

The post QCB issues government Ijara Sukuk, maintains Qatar’s banking resilience appeared first on International Finance.

The entity has also issued Resolution No. 1 of 2026, amending its rulebook to incorporate provisions specific to bonds and sukuk, in addition to completing an integrated suite of operational and technical measures, including the introduction of a dedicated trading board for bonds and sukuk that is separate from equities.

“Trading sessions and price limits were structured to reflect the distinct nature of these instruments, differing from conventional equity trading mechanisms. Together, these measures represent a significant addition to the Kuwaiti capital market and constitute a pivotal step toward developing its investment environment and diversifying its instruments in line with international best practices,” said Boursa Kuwait.

“We are pleased to announce the completion of full operational and technical readiness for this phase, as system tests conducted by Boursa Kuwait and the capital market apparatus delivered successful results, confirming the trading infrastructure’s readiness. Boursa Kuwait is now fully equipped to receive listing applications and operate the bonds and sukuk trading platform, with instruments to be listed upon meeting the applicable regulatory requirements,” remarked the exchange’s CEO Mohammad Saud Al Osaimi.

Noting that investor confidence in Kuwait’s capital market is a trust the exchange is committed to upholding, Al Osaimi added, “What sets this phase apart is the introduction of new investment instruments at a time when the region is facing exceptional geopolitical challenges. This reflects the depth of investor confidence in Kuwait’s national economy and its capital market, underscoring the apparatus’s commitment to continued development despite these conditions.”

“We would also like to reassure all market participants that trading systems are operating at full efficiency, and that Boursa Kuwait is distinguished by a robust operational infrastructure that provides investors with the tools and environment needed to manage their portfolios with confidence,” he continued.

Resolution 38 establishes a comprehensive regulatory framework, covering the full lifecycle of bonds and sukuk in the Kuwaiti capital market, from listing and daily trading through to early redemption or maturity.

The new framework will further govern the listing of both domestic and foreign issuances, setting out ongoing obligations for issuers and obligors throughout the listing period and defining procedures for delisting and withdrawal, including mechanisms for the treatment of these instruments in relation to their exclusion from market indices.

The resolution’s regulatory amendments also align with five clear strategic objectives that reflect the long-term direction for the Kuwaiti capital market.

“These include aligning the Kuwaiti capital market’s regulatory framework with standards recognised in global capital markets, establishing a clear and structured approach to listing and trading that provides legal certainty for all stakeholders, and enhancing market liquidity through the introduction of a new class of tradable instruments. The amendments also aim to strengthen disclosure standards and transparency in a manner that serves investors’ interests and reinforces their confidence, while supporting greater diversification of investment instruments in the Kuwaiti market and reducing reliance on equities as the primary investment vehicle,” Boursa Kuwait added.

“For the first time ever, Kuwaiti and foreign companies can finance their operations and projects through the issuance of listed bonds or sukuk on Boursa Kuwait, benefiting from clear and viable financing advantages. The instruments allow issuers to secure funding at competitive costs compared to traditional bank borrowing and access a broader and more diversified investor base beyond conventional lenders,” it remarked.

Under the new framework, companies seeking listing in Boursa Kuwait must meet conditions designed to safeguard investor interests. These include obtaining a credit rating from a recognized rating agency, adhering to a minimum issuance value of no less than KD100,000 (USD 322,860) or its equivalent in foreign currencies, ensuring free tradability without restrictions and establishing a body to represent and protect the interests of bond or sukuk holders.

“Additionally, sukuk issuances must comply with the principles and rules of sharia,” Boursa Kuwait concluded.

The post Boursa Kuwait gets nod to launch bonds, sukuk platform appeared first on International Finance.

Fitch assesses liquidity using Bloomberg’s Liquidity Assessment (LQA) scores, which indicate security-level liquidity. The ratio can range from one to 100, with 100 signifying the highest liquidity. Generally, a score of 100 is assigned to securities with the lowest liquidation costs within an asset class, while securities with the highest costs get a score of one.

According to Fitch, LQA is a data-driven model that produces a daily security-specific liquidity surface that captures the relationship between volume, cost, and time.

“The LQA decline for investment-grade sukuk has been less severe than for speculative-grade sukuk on average,” the agency stated further.

“While LQA scores have declined in most GCC debt capital markets since the Iran war’s beginning, as well as for sukuk issuers in Turkey, Egypt and Indonesia. On the other hand, many rated Malaysian, Omani, and supranational sukuk have shown resilience in their LQA scores,” Fitch noted.

“Sukuk in the ‘BB’ and ‘B’ categories have the lowest LQA scores among all Fitch-rated sukuk globally on average, with the steepest liquidity fall compared to other rating categories since the war began. Sukuk in the ‘F1sf’, ‘AAA’, ‘BBB’, ‘AA’, and ‘A’ categories held the highest liquidity of all rated sukuk, but also faced declines, except ‘F1sf’,” it stated.

Sector-wise, corporates, infrastructure and project-finance sukuk had the lowest LQA scores among all rated sukuk globally, with the steepest liquidity falls. Asset-backed, supranational and sovereign sukuk, in contrast, maintained the highest liquidity levels, except asset-backed sukuk, whose scores increased.

“Fitch also analysed liquidity for 52 comparable sukuk and bonds from the same issuers. Liquidity was broadly similar in 50% of cases, sukuk were less liquid than bonds in 31%, and more liquid in 19%. GCC US dollar sukuk and GCC US dollar bonds have displayed broadly similar liquidity trends, with both declining since the war began. The average LQA score for GCC US dollar sukuk fell to 45 on 23 March from 56 at the end of 2025. The average score for GCC US dollar bonds dropped to 48 from 53 in the same timeframe,” the ratings agency remarked.

“About 64% of Fitch-rated sukuk had an LQA score above 50 on 23rd March, down from 82% in January 2025 (excluding local ratings and sukuk without an LQA score). Investment-grade sukuk are generally more liquid, with an average score of 65 as of March 23 (January 2026: 73), compared to 33 for speculative-grade sukuk (January 2026: 48). Historically, GCC DCMs have rebounded fairly quickly when tensions eased following previous Middle East geopolitical episodes, but the impact this time will depend on the scale and duration of the war,” it concluded.

The post Fitch sees varying effects on Sukuk, Gulf debt market liquidity appeared first on International Finance.

“Historically, regional DCM issuances have typically rebounded swiftly once tensions eased following previous geopolitical conflicts in the Middle East. However, the ultimate effect will depend on the scope and duration of the Iran war. While some yield widening is visible in GCC bonds and sukuk since the war began, there have not been market-wide selloffs,” the agency stated.

Before the conflict’s beginning, issuance activities in the Middle East were displaying strong investor appetite. While about 84% of Fitch-rated sukuk in the GCC countries were rated investment grade, 63.2% was in the ‘A’ category, while 90% of issuers were on Stable Outlooks. Most importantly, there were no defaults by the end of 2025.

“GCC issuances were strong at the start of 2026, with many entities aiming to benefit from favourable conditions ahead of the typical Ramadan slowdown. GCC debt capital market (DCM) outstanding reached USD1.2 trillion as of March 9, 2026, up 14% year on year, with 63% of issuance denominated in US dollars. Sukuk issuance rose to a record 41% share of GCC DCM volumes, with Saudi Arabia and the UAE making up the majority of GCC DCM outstanding, followed by Qatar, Bahrain, Kuwait and Oman. Sukuk in EMs rose to 16% of all dollar DCM issuance in 2025 (excluding China; 2024: 12%). Local-currency GCC sukuk and bonds continue to be issued, mainly by sovereigns,” Fitch remarked.

While funding needs and diversification priorities remain key focus areas for Gulf countries, governments and issuers are now seeking broader liquidity channels.

Fitch sees issuers planning their funding activities well in advance, particularly for large maturities, which will help limit immediate refinancing pressure.

“Despite heightened geopolitical challenges in recent years, GCC issuer activity has rebounded quickly once tensions eased, with market access broadly maintained for many issuers. However, the duration and scale of the conflict in the Middle East have already surpassed the 2025 Twelve-Day War, testing new levels of market uncertainty,” the agency noted.

MENA (Middle East and North Africa) sukuk continues to trade tighter than bonds originating in the region, reflecting sustained and broader demand, including from Islamic banks, with yield widening more pronounced among non-investment grade issuers. The yield-to-maturity (YTM) on the S&P Global High Yield Sukuk Index rose to 6.61% on 10th March 2026, up from 5.82% on 27th February (a 79bp increase).

“Similar periods of yield widening have occurred, particularly in times of heightened geopolitical or Sharia-related uncertainty. However, the current YTM movement remains below the peak levels recorded in earlier episodes,” Fitch concluded.

The post Middle East tensions: Fitch issues outlook for sukuk issuances appeared first on International Finance.

As Gulf countries ⁠diversify their economies away from oil, investing billions in sectors like financial services, hubs ⁠like the Dubai International Financial Centre have ‌been attracting an increasing number of companies. The total number of actively registered firms at the centre stood at around 8,840 ⁠as of the end of December 2025, up 28% from 2024. Active company registrations also increased by 2,525, a rise of 39% from the 2024 tally.

These included 557 wealth and asset management firms, which in recent years have been setting up base or ⁠expanding their footprint in Dubai and neighbouring Abu Dhabi as the UAE attracts high-net-worth individuals, helped by factors such as the relative ease ‍of doing business and low tax status.

“We had a slight uptick in the UK, and that probably has been a reflection of the growth in hedge funds that have been brought from that country,” DIFC Governor Essa Kazim told the media, while speaking about the geographical breakdown of firms at the centre. The Dubai International Financial Centre, meanwhile, is set for an around USD 27 billion expansion to be delivered by 2040, with the hub reaching full capacity, apart from seeking to welcome new firms.

Asked about funding for the project, Kazim said that the Dubai International Financial Centre achieved ⁠a net profit of around USD 400 million in 2025, remarking, “That is really the future cash flow that will contribute to the expansion, together with internal resources as well as a potential return ‌to capital ⁠markets. Definitely, the market is open. In the past, we issued sukuk, and that’s ⁠one possibility.”

In terms of operational profits, DIFC reported record annual results for 2025, posting double-digit growth in company registrations, revenue and net profit. Combined revenues rose 20% to Dhs2.13 billion (USD 580 million) in 2025 from Dhs1.78 billion in 2024, while net profit increased 28% to Dhs1.48 billion from Dhs1.16 billion. Dubai International Financial Centre has remained the region’s largest regulated financial services ecosystem, with 1,052 financial services firms operating in the hub.

The post Dubai International Financial Centre new registrations rise nearly 40% in 2025 appeared first on International Finance.

The demand will also be driven by supportive economic environments in core Islamic finance countries and by the United States Federal Reserve’s likely continuation of monetary easing policies.

“Overall, we expect issuance to reach USD 270-USD 280 billion, including foreign currency issuance of USD 100-USD 110 billion,” said the rating agency’s Islamic Finance Head Mohamed Damak.

In 2025, the sukuk market remained concentrated among a few issuers, with GCC countries Saudi Arabia and the UAE accounting for 45% of issuance volume, followed by Malaysia.

“While we do not expect this structure to change significantly, we have seen interest from new issuers, with some successfully entering the market, such as Egypt,” the senior official added.

S&P expects new issuers to tap the Islamic finance market in 2026 to diversify their investor base and secure more competitive pricing than conventional bonds.

Also, global sukuk issuance increased to USD 264.8 billion during the year, up from USD 234.9 billion in 2024, underpinned by strong performance from Malaysia, Saudi Arabia, Turkey, the UAE and Bahrain.

In fact, Saudi Arabia was the second-largest contributor to last year’s growth tally, with USD 72.5 billion in sukuk issuance, including USD 38 billion in foreign currency, rising 35% from 2024. Additionally, the Kingdom’s banking sector issued more than USD 15 billion in sukuk, including nearly USD 12 billion in foreign currency-denominated sukuk, to continue funding “Vision 2030” initiatives.

The UAE, on the other hand, contributed USD 22.1 billion in issuance, of which USD 19 billion was in foreign currency.

“Real estate developers, particularly in Dubai, were among the UAE’s top issuers as they sought funds to finance land acquisition and launch new construction projects amid favourable demand trends. The report also highlighted downside risks to the outlook, including the possibility of a major spike in geopolitical risk, which could reduce investors’ appetite for sukuk and bond issuances from the GCC,” Damak concluded.

The post UAE, Saudi Arabia to lead sukuk issuances in 2026: S&P appeared first on International Finance.

Islamic funds are expected to remain the dominant category. However, the AMI remains exposed to oil-price sensitivity, local, regional and global market volatility and geopolitical risks. Equity-linked fee and performance income was weighed down by a circa 13% yoy fall in equity market capitalisation by the end of August 2025.

“Saudi Arabia’s AMI is on a steady growth path, supported by ongoing reforms and deeper local capital markets. Sharia-compliant funds remain the majority, with product breadth widening across areas such as new IPOs, sukuk and bonds, ETFs and private credit. New initiatives, such as voluntary pension and savings schemes, should enhance access and liquidity. Although market volatility and oil-price sensitivity pose near-term risks, foreign participation is rising and Saudi sukuk largely carry investment-grade ratings, supporting resilience,” said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings.

Fitch Ratings further reported that PIF’s recent MoUs with global asset managers such as BlackRock, Franklin Templeton, Neuberger Berman, and Northern Trust Asset Management would amount to about USD 12 billion and facilitate foreign capital and expertise inflows.

The share of Saudi bank-affiliated asset managers was 63.5%, while international and regional institutions rose to about 15%, it said. At the end of Q1 25, the industry AUM grew 21% yoy to USD 306.1 billion, with about half in private funds, followed by discretionary portfolio management, and public funds.

“The government aims for AUM to reach 31% of GDP in 2025 and 40% by 2030, from about 23% in 1H25. Foreign investors held 7.6% of government local debt issuances in June 2025 (2023: 5.2%),” the report noted further.

Talking about the steady emergence of Saudi Arabia’s AMI industry, a recent report from S&P Global Ratings predicted the Kingdom’s total AUM to surpass USD 500 billion by 2030, while citing factors like continuous regulatory reforms, development of debt and equity markets, increasing availability of exchange-traded funds (ETFs), real estate investment trusts (REITs), and various other retail and institutional products behind the phenomenon.

The post Saudi asset management sector on upward trajectory, say ratings agencies appeared first on International Finance.