The UAE has solidified its dominance in the Gulf sustainable debt market, accounting for approximately 61% of total issuance during the first nine months of 2026, despite a broader decline in the region’s overall sustainable debt activity. This development is significant as it underscores the UAE’s growing role as a leader in green, social, and sustainability-linked financing, even as total Gulf Cooperation Council (GCC) issuance fell by 44% to around $8 billion.
According to Fitch Ratings, the UAE’s sustainable debt issuance rose by 12% year-on-year, contrasting sharply with Saudi Arabia, which saw a 66% decline in the same period. Bashar Al Natoor, Managing Director and Global Head of Islamic Finance at Fitch, noted that while the UAE represented the majority of Gulf sustainable debt issuance, Saudi Arabia accounted for the remaining 39%.
GCC Sustainable Debt Market Overview
The total outstanding sustainable debt across the GCC exceeded $72.9 billion at the end of September 2026, marking an 18% increase year-on-year. This growth occurred despite a significant slowdown in new issuances, attributed to geopolitical tensions and capital market volatility. The performance of the UAE and Saudi Arabia illustrates a stark divergence in market trends, with the UAE’s sustainable finance initiatives gaining momentum amid challenging conditions.
Fitch’s data indicates that banks were the primary issuers in the UAE, contributing significantly to the country’s sustainable debt landscape. The UAE’s commitment to sustainable finance is further reinforced by national strategies aimed at mobilizing over AED1 trillion (approximately $272 billion) in sustainable finance by 2030, as highlighted during COP28 in 2023.
Market Dynamics and Future Outlook
Despite the recent downturn in new issuances, Fitch anticipates a recovery in the sustainable debt market, projecting growth in the fourth quarter of 2026 and into 2027. Factors supporting this recovery include government sustainability initiatives, diversification of funding sources, and increasing international investor demand for sustainable assets. The UAE’s robust sustainable finance ecosystem, characterized by a combination of bank commitments and regulatory support, positions it well for future growth.
While the GCC’s sustainable debt market remains sensitive to geopolitical conditions, the increasing establishment of sustainable finance as a core component of regional capital markets suggests a resilient outlook. Fitch’s assessment indicates that the structural drivers supporting sustainable debt issuance will likely prevail, paving the way for renewed activity once market conditions stabilize.
For further insights into the GCC’s sustainable debt landscape, refer to Economy Middle East.
The UAE’s leadership in sustainable debt issuance not only highlights its financial resilience but also reflects a broader commitment to sustainability that could influence investment trends across the region.
