Sustainable bond issuances in the Middle East are expected to reach $18 billion to $23 billion in 2025, with the UAE and Saudi Arabia contributing around 60%, S&P Global Ratings said.

Sustainable bonds account for more than 25% of regional corporate and financial institution issuance, compared with 9% globally. However, the Middle East’s share of global sustainable bonds remains below 3%.

Issuance slowed in 2024 due to post-COP28 normalisation in November 2023 and rising interest rates.

The UAE and Saudi Arabia account for more than half of regional issuance, with Qatar and Kuwait witnessing increasing volumes last year.

“We expect this trend to continue,” the rating agency stated.

Total sustainable sukuk volume in the Middle East reached $7.9 billion in 2024, with Saudi Arabia accounting for the majority.

The Gulf Cooperation Council (GCC) remained the primary source of sukuk issuances, a trend S&P expects to persist.

Sustainable bond issuance in the UAE reached $7.4 billion in 2024, marking a 28% decline from 2023.

About 60% of green bond issuances are focused on energy, including solar, with interest in other sectors such as logistics, real estate, and tourism and hospitality.

Saudi Arabia also saw a 27% year-on-year decline to $5.6 billion last year.

S&P expects localisation will lay the groundwork for new bond types in the Middle East, with increased issuance of blue and transition bonds amid water scarcity and hydrocarbon exposure.