emirates7 - The UAE is experiencing significant growth in its mega projects across critical sectors like infrastructure, renewable energy, and real estate development, aligning with a strategic vision that prioritizes sustainability in its economic policies.
These large-scale initiatives, alongside the country’s commitment to sustainable projects that support climate objectives, are expected to drive the issuance of sukuk and bonds in the coming years.
Global credit rating agencies, such as Standard & Poor’s and Fitch, predict a growing reliance on these issuances, fueled by efforts to diversify funding sources and promote sustainable investments.
Bashar Al Natoor, Managing Director and Global Head of Fitch Ratings' Islamic Finance Group, stated that while traditional financing methods still dominate mega project funding, these ventures have stimulated demand for innovative and sustainable funding sources, contributing to the growth of the issuance market in recent years. He also noted that sukuk and bonds have partially funded some past projects.
Speaking to the Emirates News Agency (WAM), Al Natoor forecasted an increase in the use of bonds and sukuk for project financing in the coming years, as both public and private sector entities in the UAE and other regional markets look for alternatives to traditional financing tools.
He highlighted several upcoming projects, including real estate, infrastructure, and renewable energy developments. In Dubai, for example, the infrastructure sector will account for 46% of total government expenditures in the 2025-2027 budget, funding projects like roads, tunnels, bridges, transportation systems, sewage plants, parks, renewable energy stations, and the rainwater drainage network.
The expansion of Al Maktoum Airport, announced last year, is another significant initiative aimed at enhancing quality of life and promoting sustainable, smart mobility in the emirate.
Al Natoor explained that as part of its net-zero emissions strategy by 2050, the UAE is launching green projects to ensure both economic and environmental sustainability, which will be a major factor in driving sukuk and bond issuances. This trend has already been observed in previous years.
He also emphasized that the UAE's green projects are an attractive opportunity for global investors looking for sustainability-linked financial instruments.
Zahabia Gupta, Director and Lead Analyst for Middle East and Central Asia at S&P Global Sovereign Ratings, noted that the rising issuances in the UAE over the next two to three years will be partly driven by strong public investment plans. These include the US$35 billion Al Maktoum Airport expansion and the US$8.2 billion rainwater drainage network in Dubai, scheduled for phased completion by 2033.
Gupta also explained that lower interest rates would stimulate increased lending for businesses and individuals, including mortgage financing.
On the federal level, Gupta pointed out that the UAE government started issuing foreign currency bonds in 2021, followed by local currency treasury bonds in May 2022, and local currency sukuk in April 2023. These issuances aim to support capital market development in the UAE and establish a yield curve for non-sovereign issuers.
These large-scale initiatives, alongside the country’s commitment to sustainable projects that support climate objectives, are expected to drive the issuance of sukuk and bonds in the coming years.
Global credit rating agencies, such as Standard & Poor’s and Fitch, predict a growing reliance on these issuances, fueled by efforts to diversify funding sources and promote sustainable investments.
Bashar Al Natoor, Managing Director and Global Head of Fitch Ratings' Islamic Finance Group, stated that while traditional financing methods still dominate mega project funding, these ventures have stimulated demand for innovative and sustainable funding sources, contributing to the growth of the issuance market in recent years. He also noted that sukuk and bonds have partially funded some past projects.
Speaking to the Emirates News Agency (WAM), Al Natoor forecasted an increase in the use of bonds and sukuk for project financing in the coming years, as both public and private sector entities in the UAE and other regional markets look for alternatives to traditional financing tools.
He highlighted several upcoming projects, including real estate, infrastructure, and renewable energy developments. In Dubai, for example, the infrastructure sector will account for 46% of total government expenditures in the 2025-2027 budget, funding projects like roads, tunnels, bridges, transportation systems, sewage plants, parks, renewable energy stations, and the rainwater drainage network.
The expansion of Al Maktoum Airport, announced last year, is another significant initiative aimed at enhancing quality of life and promoting sustainable, smart mobility in the emirate.
Al Natoor explained that as part of its net-zero emissions strategy by 2050, the UAE is launching green projects to ensure both economic and environmental sustainability, which will be a major factor in driving sukuk and bond issuances. This trend has already been observed in previous years.
He also emphasized that the UAE's green projects are an attractive opportunity for global investors looking for sustainability-linked financial instruments.
Zahabia Gupta, Director and Lead Analyst for Middle East and Central Asia at S&P Global Sovereign Ratings, noted that the rising issuances in the UAE over the next two to three years will be partly driven by strong public investment plans. These include the US$35 billion Al Maktoum Airport expansion and the US$8.2 billion rainwater drainage network in Dubai, scheduled for phased completion by 2033.
Gupta also explained that lower interest rates would stimulate increased lending for businesses and individuals, including mortgage financing.
On the federal level, Gupta pointed out that the UAE government started issuing foreign currency bonds in 2021, followed by local currency treasury bonds in May 2022, and local currency sukuk in April 2023. These issuances aim to support capital market development in the UAE and establish a yield curve for non-sovereign issuers.