DUBAI: The Middle East is poised for significant growth in sustainable bond issuances, projected to reach $18 billion to $23 billion by 2025, led by the UAE and Saudi Arabia.
This represents a substantial portion of regional corporate and financial institution issuance, exceeding global averages. However, despite this burgeoning market, the region’s contribution to global sustainable bond volumes remains modest, highlighting its untapped potential.
While issuance witnessed a temporary slowdown in 2024, attributed to post-COP28 normalisation and rising interest rates, key players like the UAE and Saudi Arabia continue to dominate, accounting for over half of the region’s activity.
The dominance of the Gulf Cooperation Council (GCC) in sukuk issuances, particularly those with sustainable underpinnings, further solidifies this trend.
Notably, the concentration of green bond investments primarily in the energy sector, especially solar projects, reveals a focused approach. However, diversification towards sectors like logistics, real estate, and tourism is emerging.
Looking forward, the anticipated localisation and the imperative of addressing regional challenges like water scarcity and hydrocarbon dependence suggest a promising future for specialised instruments such as blue and transition bonds.
The Middle East’s sustainable bond market, while currently concentrated, possesses considerable scope for expansion and diversification, fueled by growing awareness and a commitment to sustainable development.
