S&P Expects $70–$80 Billion in Foreign Currency Sukuk in 2025
S&P Global said it still expects $70 to $80 billion worth of sukuk (Islamic bonds) to be issued in foreign currencies in 2025.
Trends in Sukuk Issuance
In the first half of 2025, foreign currency sukuk grew by 9% to $41.4 billion. However, sukuk issued in local currencies dropped by almost 15% to $101.3 billion.
S&P said local currency sukuk may stay low due to less need for borrowing in some countries and tighter liquidity in others.
The rise in foreign currency sukuk was mostly due to higher issuances from the UAE, Bahrain, and Kuwait, although Saudi Arabia saw a small decline. This increase happened despite uncertainty in global markets after the U.S. announced new tariffs and interest rate cuts were slower than expected.
Sukuk remains an important source of funding for Islamic finance countries that depend a lot on oil income.
S&P does not expect a major war in the Middle East but warned that ongoing conflict could lead to blocked trade routes, cyber or terrorist attacks, or foreign involvement.
The agency also said the sukuk market could benefit if the U.S. Federal Reserve lowers interest rates by 0.5% at the end of 2025.
Growth in Sustainable Sukuk
Sustainable sukuk (those used for green or social projects) grew by 27% to $9.3 billion in the first half of 2025.
Banks made up about half of this, with the rest coming from companies in the GCC and Malaysia. Saudi Arabia made up over 60% of these issuances.
Because of this strong performance, S&P raised its forecast for full-year sustainable sukuk to $14–$16 billion. Issuance could rise even more if GCC countries move faster toward climate goals and if regulators give support for sustainable finance.
Published: 9th July 2025
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