An analysis indicates that Islamic syndicated financing will continue to be a major source of funding in 2026 for Saudi Arabia and the UAE, due to the simplicity associated with the financing mechanism as compared to sukuks and bonds.
In the latest report, Fitch Ratings mentioned that the global Islamic syndicated financing increased by an estimated 16 percent year-on-year in 2025 to approximately $215 billion of outstanding amounts.
This financial instrument is a type of arrangement that is based on Islamic law and includes multiple lenders offering funds to a borrower. These arrangements are used by financial institutions and banks to combine resources and share risk, all while following the principles of Islamic finance.
Fitch’s Global Head of Islamic Finance, Bashar Al-Natoor, said, “We expect vibrant activity in 2026 with key drivers such as Islamic banks’ growing funding role in many national banking systems, ease of requirements, speed, and the lower complexity of syndications than sukuk and bonds issuance.”
He also indicated that a further increase in Islamic syndicate financing could be boosted by the anticipated Fed rate reduction, low oil prices, cross-sector financing requirements, and diversification goals in prime markets.
Al-Natoor stated, “Over 60 percent of Fitch-rated Islamic banks globally are investment-grade at end-2025, 90 percent on Stable Outlooks, with many involved in cross-border and domestic syndications.”
The report indicated that the Kingdom had 34 percent of all Islamic syndication outstanding in the world as of the end of 2025, with the UAE and Egypt next at 33 percent and 8 percent, respectively.
The Saudi government strives to mobilize up to 50 percent of its sovereign funding needs by the year 2026, completely out of the private markets, including syndications.
UAE entities related to the government are at the center of development expenditure, and they are expected to accrue more debts, including through syndicated financing. Egypt continues to receive solid support from bilateral and multilateral lenders.
However, the report was also warning that the emergence of Islamic syndications would be slowed by the government efforts to establish sukuk and debt capital markets in the Gulf Cooperation Council region, Egypt, ASEAN, and Turkiye, as well as the development of funding channel options like non-bank financial institutions, certificates of deposit, could slow Islamic syndications.
Fitch further indicated that the development of Islamic syndicated financing would be impacted by the evolution and divergence of Shariah conditions and geopolitical and market uncertainties.
The Saudi Press Agency announced in January that the International Islamic Trade Finance Corp., a member of the Islamic Development Bank Group, took the first position in the world among the best Bookrunner and Mandated Lead Arranger in the 2025 Islamic syndicated finance deal rankings published by Bloomberg and the London Stock Exchange Group Data and Analytics.
