In 2024, UAE-based issuers witnessed a remarkable sukuk issuance volume totaling $14.4 billion, as reported by S&P Global Ratings.
Mohamed Damak, managing director and global head of Islamic Finance at S&P Global Ratings, conveyed expectations that the sukuk issuance in the UAE will likely remain steady at approximately $14-15 billion in 2025. This projection is supported by ongoing activities from both banks and corporate entities. Damak underscored the strong financial performance of the UAE, attributing it to a favorable economic environment and effective fiscal management.
Growth in debt capital markets
The UAE’s debt capital markets (DCMs) have exhibited significant expansion, marked by a year-on-year increase of 13.1 percent in outstanding debt, which reached $294.4 billion by the conclusion of Q3 2024, as reported by WAM in November 2024.
In remarks made to the state-owned news agency, Bashar Al Natoor, the managing director and global head of Islamic Finance at Fitch Ratings, pointed out that the UAE plays a crucial role in the global sukuk arena, holding a 6.6 percent share of the global outstanding sukuk. This positions the UAE as the fourth largest globally across all currencies, trailing only Malaysia, Saudi Arabia, and Indonesia.
Additionally, the UAE stands out as one of the leading issuers of U.S. dollar debt in emerging markets (excluding China), commanding an 8.9 percent share of the total in the first half of 2024, following Saudi Arabia and Brazil.
Moreover, during the first nine months of 2024, the UAE ranked as the second-largest issuer of ESG bonds and sukuk in emerging markets outside China, following Brazil.
Regional influence and issuance trends
Regionally, the UAE holds the second-largest share of the total GCC outstanding sukuk at 16.2 percent, significantly behind Saudi Arabia’s dominant 71 percent share. In terms of issuance, Al Natoor noted that while the sukuk issuance in the UAE was recorded at $9.9 billion during the initial nine months of 2024—a decline of 13 percent year-on-year—it is important to highlight that this decrease is less severe compared to the 25 percent drop seen in bond issuance during the same timeframe.
Policy support for sustainability
Following the implementation of the Dirham Monetary Framework by the government, the share of Dirham in the DCM outstanding rose dramatically to 21.1 percent by the end of the first half of 2024, up from a mere 0.5 percent at the end of 2020. The government continues to promote sustainability initiatives. In April 2024, the regulatory body extended the fee exemption for the listing of ESG bonds and sukuk, a move aimed at facilitating increased ESG issuance in the market.
