Fitch Ratings said that Fitch-rated sukuk remain resilient, supported by strong credit quality, record issuance, and expansion into new markets and sectors.
More than 80% of Fitch-rated sukuk were investment grade in 2025, and over 90% of issuers carried Stable Outlooks, with no defaults recorded over the past four years, Fitch said.
“First-time Fitch-rated sukuk are emerging in markets such as Australia, the U.K., and Sri Lanka, despite sukuk’s additional structural complexities,” said Bashar Al Natoor, global head of Islamic finance at Fitch Ratings.
Coverage remains concentrated in the Middle East and Asia. Most rated sukuk are senior unsecured, although the share of subordinated sukuk is rising, reflecting growing market sophistication. Maturities are skewed toward the medium term.
During the year, Fitch rated Australia’s first sharia-compliant notes issued by Macquarie Group Ltd., rated ‘A’; the U.K.’s first public sharia-compliant residential mortgage-backed securities from non-bank lender Meridian Funding 2025-1 plc; and Sri Lanka’s first sukuk, issued by Vidullanka PLC and rated ‘A+(lka)’.
Fitch also rated Africa’s largest sukuk, issued by Egypt and rated ‘B’; Turkiye’s first corporate sukuk from Turk Telekom; and the first sukuk featuring payment-in-kind structures. Sovereign and state investment funds were active issuers, including the UAE’s Mubadala, Saudi Arabia’s Public Investment Fund, and the Turkiye Wealth Fund.
Fitch rates more than 73% of outstanding U.S. dollar sukuk, the vast majority of which are denominated in dollars.
Fitch-rated sukuk outstanding rose 23% year-on-year to $240 billion at the end of 2025, as global issuance climbed 25% to a record level exceeding $300 billion. Fitch expects issuance to slow during Ramadan in the first quarter of 2026.
By rating category, most sukuk were rated in the ‘A’ category, accounting for 39% of the total, followed by ‘BBB’ at 26.2% and ‘BB’ at 10.5%. Fitch upgraded Oman to ‘BBB-’ and Pakistan to ‘B-’ in 2025, resulting in related sukuk upgrades.
Most sukuk remain asset-based, although asset-backed issuance is increasing, particularly among supranational and U.K. issuers. Structures are predominantly bullet and fixed-rate, and about 12% of sukuk are classified as ESG.
The continued dominance of investment-grade ratings and the absence of defaults underscore the growing credibility of the global sukuk market. Expansion into non-traditional jurisdictions such as Australia and the U.K., alongside innovation in structures and ESG-linked issuance, suggests sukuk are becoming a mainstream funding tool rather than a niche Islamic finance product.
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