It was another record year for the global sukuk market demonstrating its continuing resilience amid a challenging market backdrop marked by elevated interest rates, weak global growth and subdued conventional bond issuance. The total issuance volume in 2025, according to LSEG, rose 14.5% to US$291 billion, driven primarily by a surge in Gulf Cooperation Council (GCC)-based transactions during the period. This was particularly apparent in Saudi Arabia, which continued to rely on sukuk to meet its budgetary and liquidity requirements.

This strong momentum was still evident at the start of 2026, but lost its steam in the wake of the major outbreak in the Middle East crisis at the end of February. But the deal flow is starting to pick up once again led by banks amid the continuing build up in the transaction pipeline in the wake of the cessation of hostilities. In the meantime, local currency issuances keep the sukuk growth trajectory going with transactions from Malaysia, Indonesia, Pakistan, Turkey and Saudi Arabia.

Environmental, social and governance (ESG) sukuk issuance also reached a record US$23.8 billion in 2025, notes LSEG, rising 54% year on year and extending a period of rapid multi-year expansion, reinforcing its position as one of the fastest-growing segments within sustainable finance. Sharing a fundamental commitment to ethical, values-based economic activity, Islamic finance continues to be a significant driver in raising capital earmarked for sustainable financing. The sukuk market saw several thematic transactions to fund projects in renewable energy, affordable housing, small and medium-sized enterprises (SMEs), and those related to diversity and financial inclusion.

In Indonesia, Bank Syariah Indonesia raised in June 2025 a 5-trillion-rupiah (US$277.85 million) sustainability mudharaba sukuk in three tranches to fund activities categorized as environmentally and socially responsible business activities. These include renewable energy, environmentally-friendly transportation,  water and wastewater management, sustainable management of natural resources, job creation and programmes, including SME and microfinance financing.

The state-owned PT Sarana Multigriya Finansial printed in July a 250-billion-rupiah social sukuk to refinance Shariah-compliant housing and settlement financing activities aimed at increasing home ownership and improving the availability of affordable housing projects for low-income communities. A similar social sukuk amounting to 1.55 trillion rupiah was raised by Pagadaian, the state-owned financial services company that operates as the country's largest pawnbroker, for SME and Shariah-compliant financing. The proceeds were also earmarked to implement the company’s good corporate governance principal activities.

Permodalan Nasional Madani, a state-owned financial institution focusing on poverty alleviation and financial inclusion, raised a total of 2.77 trillion rupiah in orange sukuk in July and September 2025, with the proceeds used as working capital to finance projects to help underprivileged women entrepreneurs – illustrating its commitment to advancing gender equality and financial inclusion. The deal garnered an order book that was 11 times covered, reflecting the strong investor demand.

In Malaysia, the total bond and sukuk outstanding grew to 2.25 trillion ringgit (US$552.80 billion) in 2025, according to Securities Commission Malaysia, up from 2.10 trillion ringgit a year ago. This came on the back of lower redemptions of government bonds as well as higher issuances of corporate bonds. The overall Malaysian government securities (MGS) yield softened across all tenures during the year, with the benchmark 10-year MGS yield falling to 3.495% from 3.817% at the end of 2024.

Malaysia continued to show the way in Islamic sustainable financing in the region with different thematic transactions across the different sectors. The Malaysian issuances, LSEG notes, were supported by the entry of a broader range of non-financial corporates, signalling a deeper real economy orientation for ESG sukuk issuance.

Malaysia Rail Link, the company responsible for developing and managing the East Coast Rail Link, a 665-kilometre electrified railway designed to connect Peninsular Malaysia’s east and west coasts, raised in July 2025 via private placement 2 billion ringgit in another Sustainable Development Goals sukuk to finance the project. The fund raising was structured as a floating rate Islamic medium-term note, marking the first floating rate note offering to be guaranteed by the government of Malaysia.

In another market-defining deal, SD Guthrie priced a 2.1 billion ringgit dual-tranche sustainability-linked senior wakala sukuk, representing the largest ringgit issuance ever for a plantation company and the largest-ever ringgit sustainability-linked deal to date. The key performance indicators and sustainability performance targets were structured innovatively with deposit into dedicated account for utilization on sustainability initiatives. The transaction was increased from the initial base size of 1.5 billion ringgit on the back of a strong final order book amounting to 2.5 billion ringgit.

Another plantation company, Johor Plantation Group, arranged a 200-million-ringgit sustainability wakala sukuk, its first such issuance with the proceeds used to finance the Shariah-compliant capital expenditure of its integrated sustainable palm oil complex, an eligible project under the company’s sustainable finance framework.

In the single largest issuance of sustainability sukuk in the ringgit debt capital markets in recent times, PNB Merdeka Ventures, a company set up specifically to develop the Merdeka 118 tower in Kuala Lumpur, which is considered to be the world’s second-tallest skyscraper, printed in November 2025 a 6-billion-ringgit sustainability wakala sukuk in five tranches. The deal, which featured a consent solicitation exercise, is the largest corporate sustainability sukuk transaction in the Association of Southeast Asian Nations (Asean) region and the largest sustainability sukuk offering from the commercial real estate sector in the region.

In September 2025, Perbadanan Bekalan Air Pulau Pinang became the first Penang state-linked company to access the ringgit capital markets with a 300-million-ringgit sustainability wakala sukuk with the proceeds allocated to finance projects under the Water Contingency Plan 2030. These projects fall under the eligible green project category of sustainable water and wastewater management and the eligible social project category of affordable basic infrastructure as set out in the company’s sustainable finance framework.

Green financing

New Malaysian sukuk issuers were also tapping into the sustainable financing agenda, with deals like that of Northport (Malaysia), which raised 350 million ringgit in an Asean green sustainable and responsible investing (SRI) sukuk. The company is the first port operator in Malaysia to issue this type of green financing with the proceeds used to fund eligible green projects under the clean transportation category.

Malakoff Power issued in February the first Asean SRI murabaha sukuk by an independent power producer (IPP) in Malaysia. The transaction is aligned with Malakoff’s 2.0 strategic transformation supporting its shift from a traditional IPP to a renewable and environmental solutions provider through financing transition projects that decarbonize the existing assets.

Visionary Heritage arranged a 114 million ringgit in Islamic asset-backed securities (ABS), representing the first property ABS sukuk in Malaysian debt capital markets. The inaugural issuance carried a green label as the transaction involved the acquisition of green buildings – seven units of factories all located in Johor Bahru. Visionary Heritage was established to undertake securitization transactions that involve acquiring the rights, title and interests in eligible commercial, residential, industrial warehouses, manufacturing and logistics properties and/or worker and student accommodations – all of which shall be Shariah-compliant.

In the meantime, other new issuers are tapping into the sukuk market to diversify their funding sources. Qualitas Sukuk, a special purpose vehicle incorporated by the existing majority shareholders of Qualitas Medical, raised in March a 485-million-ringgit senior wakala sukuk and a 195-milliion-ringgit perpetual wakala sukuk. It is the first primary healthcare provider to tap into Malaysian debt capital markets and to issue a perpetual sukuk, which featured a novel step-up structure for the periodic distribution rate. The offering was also the first corporate sukuk transaction with dual senior and perpetual sukuk tranches.

Alsreit Capital arranged a 455-million-ringgit wakala sukuk in November representing the inaugural sukuk issuance by a real estate investment trust (Reit) to be guaranteed by Credit Guarantee and Investment Facility in Malaysia. In September, Syarikat Takaful Malaysia issued its debut tier-2 subordinated wakala al bi-istithmar sukuk, which is intended to qualify as tier-2 capital pursuant to Bank Negara Malaysia’s risk-based capital framework for takaful operators.

Meanwhile, new financing structure continued to emerge in Malaysian sukuk market, contributing to the further development of the Islamic finance market in the country. For instance, Tasco, a market leader in halal logistics, arranged a 180-million-ringgit Islamic derivative embedded financing, marking a first-of-its-kind Shariah-compliant swap-embedded financing structure without the need for a parallel International Swaps and Derivatives Association documentation and still fully compliant with Malaysia’s Shariah and regulatory framework. Approved by Bank Negara, the deal moves Islamic treasury solutions from operational workaround to strategic enabler, setting a replicable benchmark for halal supply chain financing in Malaysia and beyond.

In Pakistan, the Ministry of Finance (MoF) arranged two significant transactions in 2025 to meet its funding requirements and to reinforce its commitment to sustainable financing. MoF’s wholly-owned subsidiary, Pakistan Domestic Sukuk Company, raised 32 billion rupees (US$115 million) ijara green sukuk in May to fund sustainable-related projects. It was the first time that a green sukuk – either sovereign or corporate – was issued through the Pakistan Stock Exchange via an auction, as all previous issuances have been arranged through private placements.

The proceeds were directly utilized for the construction of three sustainable projects: the Garuk storage dam, the Naigaj dam and the 26-megawatt Shagarthang hydro power Skardu. It was the first time the proceeds of a sovereign issuance were used for direct funding of specific government projects, instead of financing budget deficits.

The MoF also raised in June US$1 billion in amortizing term loan and Islamic facilities, of which US$890 million was a commodity murahaba term facility. It featured the first-ever policy-based guarantee issued by the Asian Development Bank. The Islamic tranche was structured to comply with the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards based on commodity murabaha to satisfy the Shariah requirements of the deal participants. The landmark financing facilitated the return of Pakistan to the international capital markets and marked the sovereign’s re-engagement with the Middle East capital markets after more than two years.

In another landmark transaction, Engro Fertilizer, one of Pakistan’s leading fertilizer manufacturers, raised a seven-year financing amounting to 323.6 billion rupees fully-backed by a 100% credit guarantee from the International Finance Corporation (IFC) to cover the full principal payment obligations under the transaction, thus fully mitigating the credit risk. The proceeds were earmarked for general corporate purposes primarily to support the capital investment related to plant maintenance and turnarounds to ensure the continuous production and reliable supply of urea and other fertilizers to meet the demand. The local currency financing, which also marked the IFC’s debut Islamic finance structured facility, enabled Engro Fertilizer to secure long-term funding, while reducing exposure to foreign exchange risk.

ESG sukuk issuance base

Sustainable financing also continued to resonate in the sukuk transactions in a number of GCC countries. Saudi Arabia became the largest issuance base for ESG sukuk, according to LSEG, underpinned primarily by the higher volume from the Saudi banks. In the UAE, the issuance growth was led mainly by real estate developers expanding their use of ESG sukuk to fund green buildings and sustainability-linked projects.

Saudi Arabia’s Al Rahji Bank, the world’s largest Islamic bank in terms of assets, tapped the US dollar sukuk market twice in 2025 to raise bank capital. In January, it issued additional tier-1 (AT1) sustainability capital certificates amounting to US$1.5 billion – the largest-ever AT1 printed by a MENA bank and priced at the tightest reset spread ever by a Saudi Arabian bank at 195.4 basis points (bp) over US treasuries. The sukuk was compliant with the AAOIFI standards, which enabled the participation of all GCC investors, particularly by the UAE Islamic banks and their private banking arms.

Then, Al Rahji returned to the market in September and printed US$1 billion in tier-2 social certificates. It was the first-ever social tier-2 capital issuance from a GCC country and the profit rate of 5.651% was the lowest for a tier-2 instrument in the Saudi Arabian market and one of the lowest globally. The transaction was upsized from the initial target of US$750 million, following a surge in demand that peaked at US$2.2 billion from a well-diversified investor base.

Another Saudi Arabian bank, Arab National Bank, also raised bank capital as it printed  US$750 million in sustainable AT1 mudaraba capital securities, boosting its already robust capital position and optimizing its capital structure through diversification. The bank achieved its pricing objective as the sukuk was priced with a re-offer yield of 6.40% – backed by a strong order book amounting to US$2.4 billion.

A Kuwaiti bank, Kuwait International Bank, likewise, priced a tier-2 sustainable capital securities amounting to US$300 million in October. This is the bank’s debut sustainability sukuk, achieving the tightest reset spread ever on a tier-2 sukuk at 175bp over US treasuries. The deal was 6.7 times covered with an order book in excess of US$ 2 billion, underscoring investors’ strong appetite for highly-rated subordinated bank capital papers.

Over in the UAE, a notable development was the launch by Emirates Islamic Bank in September of the first-ever sustainability-linked financing in sukuk format by an Islamic bank, globally amounting to US$500 million and showcasing its innovative approach and commitment to the country’s net-zero 2050 ambition. The final pricing of 95bp over US treasuries was 30bp inside of the initial price guidance and represented a negative new issue concession in the context of between 5bp and 10bp, allowing the bank to price inside its curve.

Dubai Islamic Bank followed suit in November and priced a larger sustainability-linked wakala sukuk amounting to US$1 billion. The deal was printed with a re-offer spread of 90bp over US treasuries, the tightest spread the bank has ever achieved on any of its public capital markets issuance. This represented a 30bp tightening from the initial price thoughts and a zero new issue concession. The issuance generated an order book that peaked at over US$2 billion with the participation of 80 institutional investors, with notable allocation of 20% into Asia.

GCC issuers were also behind the renewed strength in the issuance of green sukuk in 2025 with the volume rising to US$11.1 billion – or 47% of the total ESG sukuk issuance – up from 31% in 2024. This was driven largely, LSEG says, by GCC-based energy, utilities and real estate companies financing climate-aligned and transition-related investments.

In the UAE, Omniyat Holding debuted in international debt capital markets with a US$500 million green sukuk offering in late April 2025 – the largest green sukuk from an inaugural sub-investment-grade real estate issuer globally. The deal highlighted the company’s commitment to sustainable development and it garnered demand from regional and international investors worth over US$1.8 billion.

After an absence of seven years, the National Central Cooling Company returned to the sukuk market, issuing its first-ever green sukuk in February, amounting to US$700 million. The transaction adopted a hybrid ijara-commodity murabaha structure, optimizing the use of asset base by combining ijara assets with limited commodity murabaha component of up to 46% of the sukuk proceeds. The offering saw a price compression of 40bp from the initial price guidance and achieved a negative new issue concession on the bank of a strong order book that peaked at over US$2.7 billion.

In Oman, the Oman Electricity Transmission Company printed in October its inaugural green sukuk issuance amounting to US$750 million. It achieved a final pricing of 110bp over US treasuries – the tightest ever re-offer spread recorded for a five-year issuance by an Omani government-related entity amid improving credit fundamentals. The coupon of 4.662% is also the tightest achieved by the company since 2017. The deal attracted a high-quality order book, which peaked in excess of US$2.25 billion, with strong interest from investors from across the UK and Europe, Asia, the US and the Middle East.

In the first-of-its-kind deal in Saudi Arabia, Abdul Samad Al Qurashi (ASQ), a renowned luxury perfumery, and ASQ Investment Company completed a landmark 1-billion-riyal (US$266 million) private credit sukuk and a comprehensive debt restructuring transaction – resulting in a transformative outcome for its business. The innovative structure not only enhanced ASQ’s financial flexibility, but also positioned the transaction as a benchmark for similar financing structures in the market. The transaction involved the issuance of a secured exchangeable sukuk arranged by SNB Capital.

In a clear indication of the interest and appetite for Islamic finance in Central Asia, the Joint Stock Commercial Bank Agrobank of Uzbekistan raised €160.4 million (US$184.40 million) commodity murabaha facility, the proceeds of which were used to provide Shariah-compliant financing to the bank’s retail customers and support the growth of SMEs across the various sectors in the country. The facility benefitted from a 95% comprehensive guarantee from the Islamic Corporation for the Insurance of Investment and Export Credit, which is part of the Islamic Development Bank.

For the complete list of best deals in sustainable finance, please click here.

For the complete list of best deals by market across Asia-Pacific, the Middle East and Central Asia please click here.

For the complete list of best in treasury and trade/best banking product/takaful solutions, please click here

For more information about the awards gala scheduled for August 2026 in Kuala Lumpur, please contact us at celebrate@theasset.com.