As the landscape of sustainable finance continues to evolve, the UAE’s bond market is solidifying its position on the global stage. According to a recent report from Fitch Ratings, the size of the UAE’s debt market reached approximately $320 billion in the first half of 2026, reflecting a 3% year-on-year increase. The UAE has emerged as the second-largest issuer of dollar-denominated sukuk globally, capturing a substantial 19% market share, while being the fourth-largest issuer of dollar debt among emerging markets, accounting for 8% of total issuances.
Growth in Dollar-Denominated Debt
Fitch forecasts that the UAE’s capital market will continue its steady growth into the latter half of 2026 and into 2027. This growth is primarily supported by diversification in funding sources, increasing financing needs across various sectors, and regulatory reforms that enhance the development of local financial markets. The UAE’s debt market is lauded as one of the most advanced in the Gulf region.
As of the end of June 2026, the outstanding debt in the UAE amounts to around $320 billion, with dollar-denominated debt representing approximately 74% of this total, indicating a robust capacity to attract international investments. Notably, the volume of dollar-denominated debt issuances surged by 40% in the first half of 2026 compared to the same period in 2025, culminating in nearly $24 billion, driven largely by an uptick in bond issuances.
Emergence of Sustainable Finance
Sustainable financing has become a crucial aspect of the UAE’s debt market, with ESG (Environmental, Social, Governance) related debts representing around 12% of total outstanding dollar denominated debts at the end of H1 2026. The total issuance of sustainable debt in the UAE rose by 16% year-on-year to over $3.3 billion, all of which was in the form of bonds.
This expansion indicates a growing array of financing options available in the UAE, which includes bonds, sukuk, green bonds, blue bonds, sovereign sukuk for individuals, and certificates of deposit, as well as the introduction of the first locally issued digital securities denominated in dirhams. Additionally, the Central Bank is developing a programme for sustainable Islamic Treasury Bills, named “M-Bills”, to provide further financing tools in the realm of Islamic finance.
Global Leadership in Sukuk
Fitch highlights the critical role of the UAE in the global sukuk market, where the country held a commanding 19% share of total global sukuk outstanding denominated in dollars by the end of H1 2026, positioning itself as the second-largest issuer worldwide. Sukuk account for approximately 21% of total debts in the UAE’s debt market across all currencies.
Furthermore, Nasdaq Dubai is establishing itself as one of the premier platforms for listing dollar-denominated sukuk, holding around 28% of the total globally issued sukuk in hard currencies. By the end of H1 2026, the value of dollar-denominated debts listed on Nasdaq Dubai reached approximately $110 billion, with sukuk constituting 77.5% of that total. This underscores the UAE’s competitiveness in the Islamic financing sector and supports its efforts to expand the sukuk market both locally and internationally.
Strategies for Enhancing Islamic Financing
The UAE is advancing a comprehensive strategy to develop its Islamic finance sector and halal industry. The Cabinet reviewed in March 2026 the UAE’s strategy for Islamic finance and halal industry, initially launched in 2025, aiming to double the assets of Islamic banks in the country to reach Dh2.7 trillion by 2031. The strategy also includes plans to increase domestic sukuk issuances to Dh660 billion and elevate the value of international sukuk listed in the UAE to Dh395 billion.
To further develop the local market, the federal government aims to issue Dh45 billion in local currency debt instruments, supporting the evolution of financial markets and establishing a yield curve in dirhams. Additionally, the maturity of Treasury sukuk has been extended to seven years as of H1 2026, with future extensions being a possibility. The Ministry of Finance launched a programme for government treasury sukuk for individuals, initiating with an offering of Dh100 million in June and planning an additional Dh50 million issuance in September.
Fitch notes the flexibility of UAE banks in accessing debt markets, with new public issuances resuming, including additional Tier 1 bonds, sukuk, and unsecured bonds. Continued activity in the issuance market is anticipated in the latter half of 2026, underpinned by growth in financing, credit, and longer maturities.