UAE and Saudi to Lead Record $280bn Sukuk Wave in 2026 as Green Deals Deepen Asia–Gulf Energy Ties

Global sukuk issuance is on track to hit $280 billion in 2026, with Saudi Arabia and the UAE set to drive a new wave of conventional and green deals that increasingly link Gulf energy transition plans to Asian climate‑finance demand. S&P Global Ratings expects total sukuk volume to rise from about $264.8 billion in 2025, supported by lower interest rates, resilient investor appetite and the growing use of Sharia‑compliant instruments in funding infrastructure and ESG projects.

Saudi issuers were the single largest source of sustainable sukuk in 2025, accounting for over 40 percent of global green and sustainability‑linked sukuk, followed by the UAE and Malaysia. Riyadh’s deals include transactions by sovereign entities and corporate borrowers in energy, utilities and transport, many of them explicitly tied to Vision 2030 renewables, grid upgrades and clean‑mobility programmes. The UAE, for its part, has built a reputation as one of the world’s top three hubs for green and ESG sukuk issuance, with around $2.25 billion equivalent in green and sustainability sukuk raised in the first nine months of 2024 alone.

Issuers such as First Abu Dhabi Bank and Dubai Islamic Bank have used these instruments to finance solar parks, energy‑efficient real estate, low‑carbon transport and sustainable‑water projects, while tapping both regional and international order books. Malaysia, long the pioneer of Islamic capital markets, continues to anchor the Asian leg of the market, supported by initiatives like its Green SRI Sukuk Grant Scheme, which offers incentives and clarity for environmentally‑labelled Sharia‑compliant debt.

Advisers say the next phase of market development will see more issuers from Qatar, Oman and Bahrain standardise their green‑sukuk frameworks. Environmental‑verification and certification providers are expanding in Gulf jurisdictions, offering “Green Sukuk Certificates” that validate alignment with international taxonomies and local guidelines. That process—still patchy in some jurisdictions—is critical if sukuk are to attract mainstream ESG investors in Europe, Japan, South Korea and Australia who are unfamiliar with Islamic structures but keen to finance credible transition projects.

Investor surveys cited by regional commentators show that 55 percent of Sukuk investors plan to increase allocations to green and sustainable sukuk over the next three years, citing both climate‑risk awareness and diversification benefits. Falling global policy rates should support longer‑dated issuance, while net‑zero pledges like Saudi Vision 2060 and UAE Net Zero 2050 create natural pipelines of eligible projects.

Yet challenges remain. Analysts at S&P and other agencies warn that the market needs more standardisation in documentation, clearer use‑of‑proceeds reporting and robust post‑issuance impact disclosure to avoid accusations of greenwashing. Liquidity in secondary trading can still be thin relative to conventional bonds, especially for smaller or less frequent issuers in Oman, Bahrain and some Malaysian corporate names.

For Gulf treasuries and corporates, 2026 is likely to be a year of portfolio rebalancing rather than experimentation. With oil prices expected to stay within budgeted ranges and fiscal positions generally stronger, many sovereigns will shift more of their financing mix toward ESG‑labelled sukuk to signal commitment to transition without materially raising costs. Corporate borrowers in utilities, petrochemicals, aviation and real estate are preparing frameworks that allow them to issue both conventional and green sukuk off the same shelf, responding quickly to pockets of investor demand.

For Asian investors, the message is increasingly clear: the Gulf is no longer just an exporter of crude and LNG but also a growing exporter of investible, Sharia‑compliant climate‑finance paper, offering a way to gain exposure to both the region’s macro strength and its decarbonisation spend. If 2025 was the year green sukuk ceased to be a niche, 2026 could be the year they become a mainstream component of global sustainable‑fixed‑income portfolios, with the UAE, Saudi Arabia and Malaysia at the core of that shift.