Sustainable bond issuances in the Middle East are projected to reach between $18 billion and $23 billion in 2025, with the UAE and Saudi Arabia expected to contribute around 60% of this total, according to S&P Global Ratings. This significant growth reflects the increasing focus on sustainable financing in the region.

Currently, sustainable bonds represent more than 25% of corporate and financial institution issuances in the Middle East, which is notably higher than the global average of 9%. However, the region’s share of the global sustainable bond market remains below 3%. The issuance of these bonds saw a slowdown in 2024, attributed to the normalization following the COP28 climate summit in November 2023 and rising interest rates.

The UAE and Saudi Arabia dominate the sustainable bond market in the region, accounting for over half of the total issuance. Meanwhile, Qatar and Kuwait have also experienced a rise in sustainable bond volumes last year. S&P Global Ratings expressed optimism about the continuation of this trend, indicating that sustainable sukuk volume in the Middle East reached $7.9 billion in 2024, with Saudi Arabia being the largest contributor.

In 2024, sustainable bond issuance in the UAE totaled $7.4 billion, reflecting a 28% decline compared to 2023. Similarly, Saudi Arabia experienced a 27% year-on-year decrease, amounting to $5.6 billion. Approximately 60% of green bond issuances in the region focus on energy, especially solar, but there is growing interest in other sectors such as logistics, real estate, and tourism.

S&P Global Ratings anticipates that localization efforts will pave the way for new types of bonds in the Middle East, particularly blue and transition bonds, in response to challenges such as water scarcity and reliance on hydrocarbons.