UAE Debt Market Reaches $320 Billion As Fitch Flags Iran Risk
Zawya cited Fitch Ratings research showing the UAE debt capital market grew 3 percent to about USD 320 billion in the first half of 2026, with dollar issuance rising but spreads and sukuk liquidity pressured by geopolitical risk.
UAE debt securities stood near USD 320 billion by June 30, Zawya reported from Fitch Ratings research, while geopolitical risk and rate volatility remain the main constraints on further issuance.
The market grew 3 percent year on year by the end of June.
More than 70 percent of the outstanding debt was denominated in US dollars, 21 percent was in sukuk format and ESG debt accounted for 12 percent of all dollar debt outstanding.
Fitch's base case is moderate growth in the second half of 2026 and through 2027.
Funding diversification plans, financing demand across sectors and regulatory reforms are the drivers behind that outlook, while consolidated UAE government debt is forecast to rise to 25 percent of GDP in 2026 from 22.7 percent in 2025.
Issuance already accelerated in the first half.
Total US dollar debt issuance reached USD 24 billion over the six-month period, up 40 percent from the second half of 2025, and banks and corporates are expected to keep using the market on an opportunistic basis.
The regional position is also tied to sukuk infrastructure.
Through late 2026 and 2027, UAE issuers are expected to stay near the top tier of emerging-market borrowers in US dollars and to keep a leading global role in sukuk investment and issuance.
Fitch also expects Nasdaq Dubai to keep a high global ranking for dollar sukuk listings, giving the UAE a competitive edge in that market.
Bashar Al Natoor, Fitch Ratings' global head of Islamic finance, said UAE issuers had maintained sukuk and bond market access in 2026 despite regional volatility.
New formats widened the market mix, including dirham-native digital notes, retail sovereign sukuk, blue debt, green debt and certificates of deposit.
Credit quality remained the support for that access.
Investment-grade instruments made up slightly above 80 percent of UAE sukuk, defaults were absent, and Fitch covered more than 54 percent of the UAE's outstanding dollar sukuk at midyear 2026.
The weaker part of the picture is market sensitivity.
Stable-outlook coverage among sukuk issuers dropped to 81 percent in the first half of 2026, and Fitch placed some issuers on Rating Watch Negative, including Ras Al Khaimah and a few corporates.
Abu Dhabi's 10-year dollar sovereign spread over comparable US Treasuries widened once fighting began, a sign that investors had priced in extra geopolitical risk.
The market still carried that pressure at the close: spreads were above January's pre-war level, and liquidity in Fitch-rated UAE sukuk had fallen.
