Record Sukuk Issuance in 2025: What Investors Need to Know

Fixed-Income Investing, Islamic Banking and Finance, Market Analyses |

Global issuance of sukuk Islamic finance’s version of bonds reached approximately $264.8 billion in 2025, setting a new annual record and marking a notable acceleration from 2024’s $234.9 billion, according to S&P Global Ratings. (S&P Global)

Sukuk are financial instruments that comply with Shariah principles by representing ownership in tangible assets or profit-sharing ventures rather than interest-bearing debt. (Wikipedia) This unique structure makes them core to Islamic capital markets and attractive to investors seeking Shariah-compliant fixed-income alternatives.

Why Issuance Grew in 2025

The growth in sukuk issuance last year reflected a combination of global and regional factors:

·    Strong economic performance in core Islamic finance countries especially within the Gulf Cooperation Council (GCC) and Malaysia  where financing needs remained high. (The Arab Today)
GCC countries alone accounted for a particularly large share of total sukuk issuance, with Saudi Arabia, the UAE, and Bahrain among the most active markets. (The Arab Today)
·    Supportive financing conditions resulting from lower global interest rates, which made cost-effective capital raising more attractive for sovereigns and corporations alike. (S&P Global)
·    Foreign currency sukuk volumes doubling since 2021, as international investor appetite expanded and markets looked beyond local-currency issuance. (S&P Global)

These dynamics pushed both local- and foreign-currency-denominated sukuk issuance to new highs, demonstrating robust issuance activity across sovereign and corporate segments. (S&P Global)

What This Growth Means for Investors

For fixed-income investors particularly those focused on Islamic finance or seeking diversification the 2025 sukuk market offers several noteworthy insights:

1. Sukuk are no longer niche.
Total global issuance has climbed steadily and outstanding sukuk have topped $1 trillion, showing the market’s sheer scale and maturation beyond traditional regional boundaries. (Seeking Alpha)

2. Diverse issuance could broaden investor access.
With foreign currency sukuk surpassing $100 billion last year, issuers are tapping a wider pool of global demand rather than relying only on local markets, potentially increasing liquidity for international investors. (S&P Global)

3. Risk and return dynamics may shift with macro conditions.
While supportive conditions including expected lower oil prices and potential Federal Reserve rate cuts may continue to favour issuance, sukuk markets remain sensitive to geopolitical volatility and capital market risk appetite as noted by S&P Global. (S&P Global)

Looking Ahead: 2026 and Beyond

S&P Global expects sukuk issuance momentum to continue through 2026, potentially approaching $270 billion–$280 billion, driven again by supportive financing conditions and ongoing funding needs in core Islamic finance economies. (REL Investments Group)
This anticipated growth suggests sukuk remain an important tool for sovereigns and corporations alike as they manage fiscal priorities, infrastructure projects, and strategic investments.

At the same time, broader Islamic finance outlooks highlight that regulatory shifts including possible revisions to AAOIFI standards could reshape sukuk structures over time, even if near-term issuance remains robust. (Wikipedia)

Why Investors Should Care

·    Diversification: Sukuk offer exposure to fixed-income returns without violating Islamic finance principles, making them useful for investors seeking Shariah-compliant yield alongside traditional bonds.
·    Risk Balancing: In a world where equity markets can be volatile, sukuk provide another way to balance risk through asset-backed or profit-sharing instruments.
·    Global Growth: Strong issuance figures and international investor participation suggest sukuk are evolving from regional instruments to globally relevant fixed-income assets.

Sources

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