S&P: Global Sukuk Markets Show Resilience, Expects $80 Billion Issuances in 2025

By: Mamdoh Almalki

Standard & Poor’s stated that the global sukuk market demonstrated resilience in the face of economic and geopolitical challenges during the first half of 2025, despite a 15% decline in issuances compared to last year, reaching $101.3 billion compared to $119 billion in the same period in 2024.

The agency indicated in a report that the decline was concentrated in local currency-denominated issuances, which were affected by improved financial performance in several countries, which reduced the need for financing. Meanwhile, foreign currency-denominated issuances rose by 9% to $41.4 billion, driven by strong activity in the UAE, Bahrain, and Kuwait. Standard & Poor’s expects foreign currency-denominated issuances to range between $70 and $80 billion by the end of 2025, benefiting from the US Federal Reserve’s move to cut interest rates by 50 basis points in the fourth quarter of the year, which will boost investor appetite for foreign currency-denominated sukuk.

The report also ruled out the possibility of a full-scale regional war in the Middle East, despite ongoing geopolitical tensions, considering that the relative stability of the region will be a contributing factor to maintaining positive market momentum.

The report noted that some entities, such as the International Islamic Liquidity Management Corporation, continued to issue instruments to support liquidity needs, particularly in countries with less supportive economic conditions, such as Malaysia, while Saudi Arabia and the Gulf states continued to strengthen their presence in the market.

These figures highlight a general trend of adaptation in the sukuk market, as governments retreat and institutions and banks emerge, amid strategic shifts in the nature of Islamic finance globally.