UAE and Saudi Arabia to Lead $25 Billion Sustainable Bond Issuance in 2025
The Middle East is set to see a major rise in sustainable bond issuance in 2025. Experts predict that the region will issue between $18 billion and $23 billion in green and social bonds. Leading this push are the UAE and Saudi Arabia, which will contribute about 60% of the total amount. This growth shows the region’s increasing focus on sustainability and responsible investment.
Middle East’s Strong Position in Sustainable Bond Finance
Sustainable bonds are becoming a bigger part of corporate and financial funding in the Middle East. These bonds now make up over 25% of all issuances in the region, much higher than the global average of 9%. Despite this strong performance, the Middle East still represents less than 3% of the global sustainable bond market. This gap shows the huge potential for future expansion.
Challenges in 2024 and Market Recovery in 2025
In 2024, sustainable bond issuance slowed due to rising interest rates and a cooldown after COP28 in Dubai. The UAE issued $7.4 billion, a 28% drop from 2023, while Saudi Arabia issued $5.6 billion, down 27%. Even with these declines, both countries remained leaders in sustainable finance. Analysts expect a strong comeback in 2025, with more companies and governments focusing on green projects.
Sustainable Bond: The Rise of Green Sukuk
Islamic finance is also embracing sustainability. In 2024, the Middle East issued $7.9 billion in sustainable sukuk (Islamic bonds). Saudi Arabia led this market, showing that Islamic finance can align with environmental goals.
Where the Money Goes
Most sustainable bond issuance in the Middle East funds renewable energy projects, especially solar power. However, other industries like logistics, real estate, tourism, and hospitality are also getting involved. As sustainability gains importance, more businesses will seek green financing.
Future of Sustainable Bonds in the Middle East
Looking ahead, 2025 will likely see a major rebound in sustainable bond issuance. With strong leadership from the UAE and Saudi Arabia, the Middle East is set to play a bigger role in the global green finance movement.
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