UAE Debt Market Grows Over 13% to Reach $294 Billion by End of Third Quarter: Fitch Ratings
The UAE’s debt market grew strongly, with total debt increasing by 13.1% compared to last year, reaching $294.4 billion by the end of the third quarter, said Bashar Al Natoor, managing director and global head of Islamic finance at Fitch Ratings, on Tuesday.
Sukuk Market
The UAE’s financial sector is growing, and the country plays an important role in the sukuk (Islamic bond) market, according to Al Natoor, speaking to Emirates News Agency (WAM).
He mentioned that by the end of the third quarter, sukuk made up 20% of the UAE’s debt market, with the rest being bonds.
This mix of financial products shows the UAE’s commitment to Islamic finance, attracting investors with sukuk, which are products that follow Sharia (Islamic law).
Al Natoor added that the UAE is a key player in the global sukuk market, holding 6.6% of the world’s sukuk, ranking it fourth after Malaysia, Saudi Arabia, and Indonesia.
The UAE is also one of the largest issuers of US dollar-denominated debt in emerging markets, outside China, with an 8.9% share in the first half of the year, just behind Saudi Arabia and Brazil. In the first nine months of 2024, the UAE was the second-largest issuer of ESG (Environmental, Social, and Governance) bonds and sukuk in emerging markets outside China.
Regional Performance
The UAE has the second-largest share of Sukuk in the GCC, with 16.2%, following Saudi Arabia, which holds 71%, according to Al Natoor.
However, he pointed out that Sukuk issuance in the UAE was $9.9 billion in the first nine months of the year, a 13% drop compared to the same period last year. This decrease is smaller than the 25% drop in bond issuance over the same time.
Fitch has rated $26.7 billion in Sukuk in the UAE, with 92.5% being classified as investment-grade by the end of the third quarter. The financial sector makes up 51% of these investment-grade Sukuk, followed by corporations at 21%.
“Investment-grade means most of these Sukuk have low to moderate credit risk,” he said. On the other hand, ratings in the speculative categories indicate higher credit risk or a possible default.
UAE economy
The World Bank said last month that the UAE’s economy is expected to grow by 3.3% in 2024, and 4.1% in 2025.
The economy in the Middle East and North Africa (MENA) region is predicted to grow by 3.8% in 2025. The Gulf Cooperation Council (GCC) countries are expected to grow by 4.2%, which is higher than last year’s 1.9%, showing that the region’s economy is improving.
Published: 6th November 2024
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