Global sukuk issuances reached a record high of $80 billion in the third quarter of 2025, marking a 22% increase quarter-on-quarter and an 89% rise year-on-year, according to a report by Fitch Ratings.

The issuances were mainly from Gulf countries, Malaysia, Indonesia, Turkey, and Pakistan.

This growth is attributed to lower financing costs and abundant liquidity in the Gulf states, further boosted by the Federal Reserve’s interest rate cut to 4.25% in September, while conventional bond issuances in the same markets declined by 17.6% quarter-on-quarter.

Sukuk now represent 35% of total debt issuances in major markets, up from 27.5% the previous year.

The outstanding sukuk value rose 15.5% year-on-year to reach $1 trillion by the end of Q3, with dollar-denominated sukuk accounting for 28%. Sukuk linked to environmental, social, and governance (ESG) standards made up 13% of dollar-denominated issuances, with secondary issuances also increasing.

Malaysia issued the largest share of outstanding sukuk at 34%, followed by Saudi Arabia at 30%. Outside the Gulf Cooperation Council (GCC), Indonesia, Malaysia, and Turkey together accounted for 64% of global issuances in Q3.

Within the GCC, sukuk currently make up 40% of outstanding debt instruments, compared to 16% in emerging markets.

Sukuk issuances this year are on track to exceed 2024 levels, with promising performance expected in 2026. Growth will be supported by refinancing needs, diversification goals, and Islamic finance reforms, according to Fitch.

Notably, proposed amendments by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) aim to make sukuk less similar to conventional interest-bearing debt and more compliant with Sharia principles by shifting from an asset-based model to a stricter asset-backed system, where sukuk holders gain full legal ownership of assets and bear additional risks such as default.

The new system may also increase costs and bureaucratic procedures for issuers, who will need to engage in more asset transfers and legal documentation.

The Qatar Central Bank has sought to expand the primary dealer framework to include ijara sukuk, and Saudi Arabia’s potential inclusion in the JPMorgan Emerging Markets Bond Index could boost demand for riyal-denominated sukuk.

Additionally, the UAE’s Higher Sharia Authority issued new guidance on asset sale rights, prompting issuers to review documentation.

Fitch noted that this change does not equate unsecured sukuk with secured debt but may affect future rating treatment.