Standard & Poor's: $129 billion in global sukuk issuances in the first half

Standard & Poor’s Global Ratings (S&P Global Ratings) confirmed that the war in the Middle East has cast a shadow over the global sukuk market, causing a decline in foreign-currency-denominated sukuk issuances and a drop in total issuances by Gulf countries, while local-currency issuances in Qatar and Saudi Arabia supported market activity.

The agency maintained its forecast for global sukuk issuance growth in 2026 to range between $270 billion and $280 billion, after issuances reached $129 billion in the first half of the year, compared with $112.3 billion in the same period of 2025, supported by local-currency issuances.

The report noted that total sukuk issuances in Gulf Cooperation Council (GCC) countries fell by 9% in the first half of 2026, due to economic slowdowns stemming from reduced hydrocarbon production and declining non-oil economic activity amid the war’s repercussions.

The agency added that several Gulf issuers preferred turning to traditional financing tools through private placements rather than sukuk, owing to their faster execution and simpler procedures during periods of volatility and uncertainty.

The agency warned that renewed military confrontations or continued regional tensions could affect energy exports and investor confidence, limiting sukuk issuance activity, particularly foreign-currency-denominated issuances.

The report pointed out that ongoing geopolitical risks could also lead to wider yield spreads and higher financing costs, with expectations that the US Federal Reserve will keep current interest rates steady, which may dampen the momentum of international issuances.

The agency also warned that any new escalation in the Middle East could increase risks associated with the assets backing certain sukuk, potentially negatively impacting the credit ratings of some issuances if those assets suffer direct damage.