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UAE debt capital markets grow 13% in Q3 to reach USD 294.4 billion

UAE was the second-largest issuer of sukuk and environmental, social, and governance bonds in emerging markets outside of China in the first nine months of this year, after Brazil

According to the managing director at Fitch Ratings, the UAE’s debt capital markets grew 13 points per year in the third quarter of 2024, totalling USD 294 points per billion.

Bashar Al-Natoor, the company’s global head of Islamic finance, highlighted the UAE’s important role in the global sukuk market and its expanding financial landscape.

By the end of Q3 2024, sukuk accounted for 20% of the UAE’s debt capital market, with the remaining portion in bonds.

“The UAE is a pivotal player in the global sukuk market, holding a 6.6% share of the global outstanding sukuk,” Al-Natoor noted in an interview with the Emirates News Agency.

This puts the UAE behind Saudi Arabia, Indonesia, and Malaysia as the world’s fourth-largest sukuk issuer. Additionally, with an 8% share in the first half of 2024, beating only Saudi Arabia and Brazil, the UAE has emerged as a significant US dollar debt issuer in emerging markets, excluding China.

In addition, the UAE was the second-largest issuer of sukuk and environmental, social, and governance bonds in emerging markets outside of China in the first nine months of this year, after Brazil.

Although the market as a whole expanded, Al-Natoor admitted that the amount of issuance had decreased.

The UAE issued USD 9.9 billion worth of Sukuk in the first nine months of 2024, a 13% decrease from the previous year.

In contrast to the 25% drop in bond issuance during the same period, this decline was rather slight.

The government’s recent extension of fee exemptions for ESG bond and sukuk listings, according to Al-Natoor, may help the nation’s sustainable finance efforts even more.

According to Al-Natoor, Fitch Ratings currently rates USD 26.7 billion in UAE sukuk as investment grade, with 92.5% of these securities being rated as such.

The majority of UAE sukuk have low to moderate credit risk, according to this rating distribution, with financial institutions holding the largest share at 51% and corporate issuers at 21%.

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