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S&P Global Ratings projected in February that Middle East sustainable bond issuance will total between $20 billion and $25 billion this year, building on resilience shown in 2025 when the regional market expanded by about 3 percent. The credit ratings agency reported that conventional corporate and financial bond issuance across the region climbed 10 percent to 15 percent in 2025 to reach $81.2 billion even as global sustainable bond volumes contracted sharply. Saudi Arabia and the United Arab Emirates drove much of the regional performance, offsetting a 50 percent decline in Turkiye’s sustainable issuance volumes that year. Financial institutions continued to lead funding efforts while large corporations and government-related entities stepped up participation in sustainable instruments.
The S&P Global report highlighted a clear split between sustainable bonds and loans across the Middle East market. Turkiye accounted for 60 percent to 65 percent of sustainable loan volumes by value with the balance coming mainly from the UAE and Saudi Arabia, the agency said. Corporates have favored loans for their repayment flexibility and proceeds allocation while high-emission sectors such as non-renewable energy, chemicals and transportation feature more prominently in that segment. Bonds on the other hand have been dominated by renewables and real estate issuers whose activities align more naturally with low-carbon objectives, according to the S&P Global assessment.
Sustainable sukuk issuance in the GCC reached a record $11.4 billion in 2025, up from $7.9 billion the prior year, and now represents more than 45 percent of the region’s sustainable bond issuance by value, S&P Global Ratings data shows. These instruments accounted for just 33 percent of issuance at the end of 2024 before new transparency guidelines issued by the International Capital Market Association boosted adoption. Saudi Arabia and the UAE led sukuk activity while interest in social projects has grown alongside environmental goals, with Al Rajhi Bank issuing the region’s only dedicated social bond last year. Major banks including First Abu Dhabi Bank have begun folding social objectives such as affordable housing and financial inclusion into their sustainable finance frameworks.
Blue bonds focused on ocean health and water management have gained traction in the UAE where First Abu Dhabi Bank issued the region’s first financial institution blue bond in 2025 followed by a $1 billion dual-tranche offering from Emirates NBD in early 2026, the S&P Global report stated. Transition bonds and loans have opened pathways for the hydrocarbons sector to finance emission reductions including methane abatement projects across the region. Green issuance has remained the dominant label while sovereigns increasingly use bonds to fund public goods such as climate adaptation, a practice Saudi Arabia embedded in its 2025 green bond framework.
Regulatory frameworks continue to evolve rapidly in the absence of a unified regional taxonomy, according to S&P Global Ratings. Saudi Arabia’s Capital Market Authority published new labeled debt guidelines in April 2025 while the UAE is developing its own taxonomy supported by Federal Decree Law No 11 that requires greenhouse gas reporting by May 2026. Turkiye is aligning its Green Taxonomy with European Union standards and experts anticipate many frameworks will adopt a traffic-light system to classify activities as green, transitioning or restricted. The S&P Global assessment identified transition finance and sustainability-linked loans financing bonds as key catalysts likely to drive activity through the remainder of 2026.
Market activity has stayed highly concentrated with Turkiye, Saudi Arabia and the UAE representing more than 90 percent of the regional sustainable bond market, S&P Global Ratings figures show. A surge in renewable energy projects is expected to lift Turkiye’s volumes this year as wind and solar capacity expands following a period of economic rebalancing that slowed bank-labeled bonds. The rapid growth of artificial intelligence-driven data centers and their associated energy and water demands will require close monitoring as the region balances development with sustainability targets. Global sustainable bond outstanding debt is meanwhile projected to reach a record $5.5 trillion this year even as annual issuance stabilizes, the agency reported.
