Foreign currency-denominated sukuk is expected to contribute between $70 billion and $80 billion to this year’s total, marking a 29% increase to $72.7 billion in 2024.

Saudi Arabia and Kuwait led the way for foreign currency sukuk issuance in 2024, with banks, corporations, and the Saudi government increasing their foreign currency sukuk, according to Mohamed Damak, Head of Islamic Finance at S&P Global Ratings. Banks and corporations in Qatar and Oman also became more active in this segment, while the UAE saw a slight decrease in foreign currency sukuk issuance compared to the previous year. Damak noted, “We expect foreign currency-denominated issuance to remain elevated in 2025.”

Saudi Arabia accounted for the largest share of sustainable sukuk issuance in 2024, with 38%, largely driven by local bank issuances. While the UAE’s sustainable sukuk issuance dropped by 60% compared to 2023, it still represented 15% of the total.

While geopolitical risks have not yet significantly impacted sukuk issuance, they may pose potential downside risks, Damak warned. S&P also anticipates that the full impact of adopting Standard 62 from the Accounting and Auditing Organization for Islamic Financial Institutions will be felt in 2026 as the organization continues to gather market feedback.