UAE Debt Capital Market Soars with Sukuk and Sustainability Initiatives Reaching USD 294 Billion

The UAE's debt capital markets (DCMs) surged by 13.1% year-on-year, reaching USD 294.4 billion by the close of Q3 2024, reported Bashar Al Natoor, Managing Director and Global Head of Islamic Finance at Fitch Ratings.

Al Natoor emphasized that this growth reflects the UAE’s expanding financial framework and its leading role in the global sukuk market.

With a 20% share of the UAE's DCM, sukuk issuance positions the UAE as the fourth-largest holder of global sukuk across all currencies, following Malaysia, Saudi Arabia, and Indonesia. Additionally, the UAE ranks as one of the largest US dollar debt issuers in emerging markets, holding an 8.9% share as of the first half of 2024, only behind Saudi Arabia and Brazil. Notably, the UAE became the second-largest issuer of ESG bonds and sukuk in emerging markets, following Brazil, in the first nine months of 2024.

Domestically, the UAE holds a significant 16.2% share of the GCC's sukuk market. While sukuk issuance slightly declined by 13% year-on-year, this decrease was notably less severe than the 25% drop in bond issuance. The Dirham’s presence in the DCM rose sharply, bolstered by the government’s Dirham Monetary Framework, from 0.5% at end-2020 to 21.1% at mid-2024.

Sustainability initiatives are also gaining traction, with the extension of fee exemptions for listing ESG bonds and sukuk in April 2024 to support green finance.

Looking forward, Fitch Ratings anticipates continued growth in the UAE’s DCM, with projections potentially exceeding USD 300 billion by year-end, driven by the UAE's strategic focus on sukuk and sustainability.

News Source: Emirates News Agency