Global Islamic syndicated financing is expected to record moderate growth during the second half of 2026, even as financial markets continue to face uncertainty.
According to Fitch Ratings, Islamic syndications will remain an important funding source, particularly across Saudi Arabia, the United Arab Emirates, Egypt and Türkiye.
The agency noted that borrowers are increasingly turning to Islamic syndicated financing because regional sukuk and bond markets continue to face challenges linked to geopolitical uncertainty, higher yields and more complex execution processes.
Islamic Syndications Continue to Attract Borrowers
Fitch said Islamic and conventional syndicated financing offer several advantages over sukuk and bond issuances.
These facilities generally require fewer counterparties. They also provide faster execution, greater privacy and, in many cases, longer financing tenors.
Consequently, many borrowers continue to view syndicated financing as a practical alternative during periods of market volatility.
GCC Banks Expected to Play a Bigger Role
Fitch’s Global Head of Islamic Finance, Bashar Al Natoor, said many Islamic banks and multilateral institutions in the Gulf are expected to remain active participants in syndicated financing.
“They are likely to participate in syndications as both financiers and issuers,” he said.
He explained that adequate liquidity and lower expected sukuk and bond issuance across the Gulf Cooperation Council (GCC) markets are supporting this trend.
However, Al Natoor also cautioned that lending standards are likely to remain selective because of ongoing macroeconomic uncertainty.
He further noted that approximately 64% of Fitch-rated Islamic banks and multilateral institutions held investment-grade ratings on the international scale at the end of the first half of 2026.
Issuance Declines in First Half of 2026
Despite expectations of moderate growth later this year, Islamic syndicated financing declined during the first half of 2026.
According to Fitch, reported Islamic syndicated issuances across core markets totalled $20.2 billion during the first six months of the year.
That figure represented a 25% year-on-year decline.
Meanwhile, conventional syndicated financing remained significantly larger.
The conventional segment reached approximately $85 billion during the same period while recording broadly flat growth.
As a result, Islamic financing accounted for around 19% of total syndicated issuance across core markets.
In comparison, the share stood at 24% during the first half of 2025.
Industrial Firms Continue to Lead Demand
The report also highlighted that Islamic syndicated financing continues to support a wide range of industries.
Typical financing tenors range from one year to 40 years, depending on project requirements.
Industrial companies remain the largest users of these facilities across core Islamic finance markets.
Recent Transactions Reflect Continued Market Interest
Fitch pointed to several recent transactions that demonstrate continued demand for Islamic syndicated financing.
Aircraft leasing company Avolon Holdings Limited secured a $455 million credit facility from Middle Eastern banks. The financing package included an Islamic tranche.
Meanwhile, Boubyan Bank K.S.C.P. successfully raised $300 million through an Islamic syndicated financing facility. The transaction also attracted strong participation from Chinese banks.
Outlook Remains Positive Despite Challenges
Although issuance slowed during the first half of 2026, Fitch expects Islamic syndicated financing to maintain steady momentum during the remainder of the year.
Strong liquidity across GCC banks, combined with continued demand for flexible financing solutions, is expected to support moderate growth.
Nevertheless, geopolitical uncertainty and broader macroeconomic conditions are likely to keep lenders cautious.
Even so, Islamic syndicated financing continues to strengthen its position as an important funding channel for governments, financial institutions and corporations across key regional markets.
