Fitch Ratings expects global Islamic syndicated financing to record moderate growth during the second half of 2026, as borrowers and financial institutions increasingly turn to syndicated facilities amid uncertainty affecting sukuk and conventional bond markets. The rating agency said Islamic syndicated financing is likely to remain an important source of funding, with activity continuing to be concentrated in key markets including Saudi Arabia, the United Arab Emirates, Egypt and Turkiye.
The outlook comes as issuers face a more challenging environment for accessing GCC sukuk and bond markets. According to Fitch Ratings, Iran war related volatility, higher yields and execution complexities are creating pressure on debt capital market activity, encouraging some entities to consider syndicated financing as an alternative funding channel. Islamic and conventional syndicated facilities can offer several advantages compared with sukuk and bonds, including faster execution, fewer counterparties, greater privacy and the ability to secure longer financing tenors.
Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings, said many Islamic banks and multilateral institutions in the Gulf Cooperation Council region are expected to remain active in the syndicated financing market during the second half of the year. These institutions are likely to participate both as financiers and issuers, supported by adequate liquidity across GCC banking systems and expectations of lower sukuk and bond supply in the region.
However, Fitch expects GCC banks to maintain more selective credit standards as macroeconomic volatility continues to affect market conditions. The rating agency noted that approximately 64 percent of Fitch rated Islamic banks and multilateral institutions held investment grade ratings on the international scale at the end of the first half of 2026. This relatively strong credit profile could support continued participation in syndicated financing, although lenders are expected to remain cautious when assessing individual transactions and borrowers.
Despite the positive outlook for the second half of the year, Islamic syndicated financing experienced a decline during the second quarter of 2026. Fitch said global Islamic syndication issuance fell during the period as some issuers returned sporadically to conventional bond and sukuk markets.
In the core markets monitored by Fitch, Islamic syndicated financing reached approximately $20.2 billion during the first half of 2026. This represented a 25 percent decline compared with the same period a year earlier. Conventional syndicated financing remained considerably larger, reaching around $85 billion during the first half of the year and recording broadly flat year on year growth.
The decline in Islamic syndication volumes also reduced the segment’s share of overall syndication issuance in the core markets. Islamic transactions accounted for approximately 19 percent of total syndication issuance during the first half of 2026, compared with 24 percent during the corresponding period in 2025.
Fitch noted that Islamic syndicated financing transactions can cover a broad range of financing periods, with tenors typically extending from one year to as long as 40 years. Industrial companies represented the largest share of borrowers in the Islamic syndication market during the period, highlighting the importance of syndicated structures for corporate funding requirements.
Recent transactions cited by Fitch demonstrate the continued participation of international and regional financial institutions in the market. Avolon Holdings Limited, a leading global aircraft lessor with a BBB/Stable rating, secured a $455 million credit facility from Middle Eastern banks. The facility included an Islamic tranche as part of the overall financing structure.
Another transaction involved Boubyan Bank K.S.C.P., which carries an A/Stable rating from Fitch. The bank raised $300 million through an Islamic syndicated facility that attracted significant participation from Chinese banks. The transaction reflects the growing cross-border participation that can accompany Islamic syndicated financing, particularly as banks and financial institutions seek opportunities across different funding markets.
Fitch’s outlook suggests that Islamic syndicated financing could gain further importance during the second half of 2026 as borrowers assess funding options in an environment shaped by market volatility, elevated yields and changing issuance conditions. While Islamic syndication volumes declined during the first half of the year, continued liquidity among GCC Islamic banks and multilateral institutions, combined with potentially lower sukuk and bond supply, could provide support for moderate growth in the coming months.
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