Fitch Ratings expects ESG sukuk will cross USD50 billion outstanding globally within the next two years, as issuers aim to meet their funding diversification goals and ESG mandates, alongside new regulatory frameworks and government-led sustainability initiatives.
Risks include geopolitical volatilities, surging oil prices that could reduce funding needs in some core sukuk markets, new sharia requirements that could alter sukuk credit risk, and the weakening of the sustainability drive in core markets. Almost 99% of all Fitch-rated ESG sukuk are investment-grade.
