GCC U.S. dollar sukuk and conventional bonds both recorded average liquidity scores of about 50 as of August 12, marking a point of near-parity between the two asset classes after a period of divergence tied to regional conflict. For investors and issuers across the UAE and wider Gulf, that convergence signals a market finding steadier footing, even if it has not fully returned to pre-war conditions.
Looking across all currencies rather than just the dollar, GCC sukuk actually averaged a liquidity score of 57 compared with 53 for conventional bonds, meaning sukuk holders have somewhat easier trading conditions once non-dollar issuance is included.
Recovery still short of January levels
Average liquidity in the Fitch-rated sukuk market in August was the strongest since the conflict began, but it remained slightly below where it stood in January. That pattern showed up across several measures. Just over 75 percent of Fitch-rated sukuk held a liquidity score above 50 on August 4, up from 64 percent on March 23, but still below January's 81 percent.
The median liquidity score for Fitch-rated sukuk reached 64 on August 4, a clear recovery from 55 in late March, though still under the pre-war reading of 68.
Credit quality mattered for how far the rebound reached. Investment-grade sukuk averaged a liquidity score of 69 on August 4, up from 64 in March but below January's 72. Non-investment-grade sukuk improved from 33 in March to 40 in August, still shy of the 48 recorded in January 2026.
Some markets have already moved past pre-war levels
Not every corner of the sukuk market is merely catching up. Sukuk from Egypt, Oman, Malaysia and Ireland exceeded their respective pre-war liquidity levels in August. Egypt's improvement stood out most, with its liquidity score coming in 11 points above where it stood before the conflict began.
Malaysian ringgit sukuk posted the highest liquidity score of any currency group in August and was the only currency category to move above its pre-war level, underscoring how liquidity conditions vary widely depending on where sukuk are issued and in what currency. Among sectors, asset-backed securities were the only Fitch-rated category to surpass pre-war liquidity levels.
New issuance shows sustained demand
Alongside the liquidity data, recent issuance activity points to continued investor appetite for sukuk. The International Islamic Liquidity Management Corporation completed a record $1.475 billion sukuk auction in May, its largest single offering since it was established, and structured the sale across six maturities in a single auction.
The Islamic Development Bank also raised $1 billion in its first benchmark sukuk of 2026 in May, a five-year issuance carrying a profit rate of 4.227 percent. Final orders for that sukuk exceeded $2.65 billion, reflecting demand well above the amount raised.
Closer to home, the UAE listed its first sovereign retail T-Sukuk in July. Subscription requests reached AED445 million, nearly nine times the original AED50 million target, suggesting strong domestic appetite for retail-accessible Islamic debt instruments as the broader sukuk market continues its gradual recovery.