GCC sukuk issuance rises 13.1% despite regional conflict concerns

Sukuk issuance across the Gulf Cooperation Council rose 13.1 percent in the first four months of 2026, driven by strong local-currency borrowing in Saudi Arabia, according to S&P Global Ratings' report "Islamic Finance 2026-2027: Navigating Rough Waters." Global sukuk issuance rose 20 percent over the same period, led by Malaysia, Turkiye and Indonesia. But the headline number sits inside a warning: the Gulf accounted for 45 percent of global sukuk issuance in 2025, and S&P now expects industry growth to slow to 5-10 percent in 2026, down from 10.2 percent in 2025, as the Middle East war weighs on economic growth prospects and debt capital market activity across core Islamic finance countries. S&P's base case assumes a US-Iran agreement eases the effective blockage of the Strait of Hormuz and allows oil flows to resume; absent that, Gulf banks, including Islamic lenders, face materially reduced growth opportunities. In a separate report, Fitch Ratings said GCC investors and Islamic multilateral institutions are accelerating Islamic finance's expansion into Central Asia, with Kazakhstan and Kyrgyzstan leading and Uzbekistan and Azerbaijan building early foundations. Growth, in other words, increasingly depends on institutional depth in new markets, not just headline volume in established ones.

This is a QeRN summary by Ahmed Qerni. Read the original at Arab News: https://www.arabnews.com/node/2643237/business-economy.