The GCC remained the largest contributor to emerging-market (EM) US dollar ESG debt issuance in 9M26, accounting for about 39% of the total excluding China, Fitch Ratings says.
“We expect the GCC to continue to be the leading EM contributor, supported by sustainability and transition plans, funding diversification and demand from sustainability-focused international investors,” Fitch says.
GCC ESG issuance is likely to rise in 4Q26 and 2027, although geopolitical volatility continues to pose downside risks. Activity remains concentrated in Saudi Arabia and the UAE.
Largest contributors
About $15 billion of US dollar ESG debt was issued in EMs excluding China in 9M26, down by 40% yoy. The largest contributors were Saudi Arabia (20.9%), UAE (17.8%), Brazil (15.9%), India (12.5%) and Turkiye (11.7%).
Outstanding ESG debt in the GCC exceeded $72.9 billion at end-3Q26, up 18% yoy. Sukuk represented 43%, supported by demand from Islamic banks, which account for a large share of GCC banking systems.
Most outstanding volume was denominated in US dollars (86%), followed by euros (12%). Most euro-denominated debt issuance in the GCC was in ESG format at 91% in 3Q26 (2025: 76%), reflecting investor demand and the maturity of the European ESG debt market.
US dollar debt
About 8% of all outstanding US dollar debt in the GCC was ESG-labelled. Qatari riyal green sukuk and sustainable bonds recently debuted, although market breadth remains limited.
GCC ESG issuance was about $8 billion in 9M26, down by 44% yoy, reflecting weaker debt capital market activity during the Iran conflict. Issuance came entirely from the UAE (61%) and Saudi Arabia (39%) across all currencies, highlighting market concentration.
Banks accounted for most issuance. Volume trends diverged between the two main markets, with UAE ESG debt issuance rising by 12% yoy while Saudi Arabia’s fell by 66%.
FAB's issuance
First Abu Dhabi Bank’s October 2026 AED1 billion ($270 million) three-year digitally native green notes, the first digital green bond from the Mena region, indicate that UAE issuers are extending ESG funding into digital capital markets.
Fitch rated the notes ‘AA-’ and ‘A-(xgs)’ and believes the use of distributed ledger technology does not add credit risk relative to a traditional issue.
The UAE Banks Federation announced an initiative in 2023 for the banking sector to collectively mobilise more than AED1 trillion ($270 billion) in sustainable finance by 2030. Several UAE banks have since advanced towards this target through ESG issuance and investments.
Saudi banks
Saudi banks have increased their exposure to eligible sustainable projects since 2020. ESG subordinated debt issuance has also supported capital strategies, in line with the target for renewable energy to account for about 50% of the country’s energy mix by 2030.
ESG debt tenures in the GCC range from one year to 100 years. Saudi Arabia’s Public Investment Fund issued the world’s first 100-year green bond in 2022 (rated A+).
More than 95% of Fitch-rated ESG sukuk in the GCC were investment grade at end-3Q26, and over 91.4% of issuers by sukuk volume had Stable Outlooks. Most issuances were in the ‘A’ rating category (63.2%), followed by ‘BBB’ (31.9%). Financial institutions accounted for 57.4% of Fitch-rated ESG sukuk outstanding in the GCC in 3Q26, followed by corporates (35.3%) and infrastructure and project finance (7%).
No Fitch-rated ESG sukuk has defaulted to date. Fitch rates nearly 65% of the GCC’s outstanding ESG sukuk, amounting to about $20 billion.—TradeArabia News Service
