Islamic syndicated financing is set to gain further momentum through 2026 as issuers in core markets largely avoid public USD-denominated sukuk and bond auctions due to the Iran war, Fitch Ratings has said in its quarterly Global Islamic Syndication Monitor: 1Q26 report.

The rating agency expects Islamic syndications to pick up further and to keep exceeding the volume of USD-denominated sukuk sales.

Private nature amid market stress

Syndications, including Islamic murabaha loans, are increasingly prominent in the funding mix, driven by their private nature, lower requirements and accommodating GCC (Gulf Cooperation Council) banking systems.

Amounts raised through Islamic syndications in core markets, including GCC, Egypt, Indonesia, Malaysia, Turkey and Pakistan, surpassed the combined sum raised through USD-denominated sukuk issuance in 1Q26.

Conventional syndication activity, meanwhile, slowed in the first quarter. Islamic syndications were about half of GCC syndication issuance in 1Q26, up from 35% in 2025.

“Over the longer term, Islamic syndications will be shaped by post-war market sentiment, access and funding requirements,” said Bashar Al Natoor, global head of Islamic finance at Fitch.

“Syndications continue to be a viable and core funding channel, even during periods of market stress. About 65% of Fitch-rated Islamic banks and multilaterals globally are investment-grade while GCC Islamic banks in particular maintained significant domestic market share, ample liquidity and capital buffers going into the conflict,” he added.

Large-scale funding for big private and public borrowers

Islamic syndications can mobilise large-scale funding for sectors such as infrastructure, energy, utilities, financial institutions and sovereigns.

Mixed Islamic and conventional tranches

Many entities structure syndications with Islamic and conventional tranches, diversifying funding sources and attracting Islamic banks and multilateral institutions.

$23bn Islamic syndications versus $20bn sukuk auctions in 1Q

Reported global outstanding Islamic syndications grew by over 26% y/y to $219bn at end-1Q26, mostly in Saudi Arabia, the UAE and Egypt. Tenors range from one to 40 years.

Reported Islamic syndications issued in core markets in 1Q26, meanwhile, reached $23bn, representing a 294% y/y rise. The figure was down by 18% q/q compared to 4Q25.

Conventional syndication issued in core markets dropped by about 27% y/y and 50% q/q to $32bn. USD-denominated sukuk issuances in core markets stood at around $20bn, down 9% q/q but up 20% y/y.