Sustainable bond issuances in the Middle East saw a significant drop in the first nine months of 2024, with the total value falling to $16.7 billion, an 18% decline from the previous year. The downturn is largely attributed to rising interest rates and waning enthusiasm following the COP28 summit in late 2023, according to a report by S&P Global Ratings.

Sustainable bonds now represent 15% to 20% of total bond issuances in the Middle East, excluding sovereigns and private placements—outpacing the global average of 12% to 14%.

However, including private placements and domestic issuances, which comprised 35% to 40% of the region’s total, the share of sustainable bonds falls to 10% to 15%. Despite strong growth early in 2024, sustainable finance activity in the region slowed in the third quarter.

Despite the decline, the UAE and Saudi Arabia are poised to retain leadership in the Middle East’s sustainable bond market. The UAE stands out for its diverse range of issuers, though financial institutions have dominated in 2024.

The country’s financial sector has committed to mobilizing $272 billion in sustainable finance by 2030, fueling bond issuances. Moreover, large corporations, especially government-related entities, are also pivotal in driving sustainable bond growth.