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S&P Global Ratings adjusted its full-year forecast for Middle East sustainable bond issuance to between $15 billion and $20 billion from a previous range of $20 billion to $25 billion amid ongoing geopolitical pressures. The rating agency’s midyear outlook showed sustainable bond volumes fell to $7 billion in the first six months of 2026 from $10 billion a year earlier while overall regional bond issuance dropped more than 40 percent in the same timeframe. That relative resilience in sustainable instruments came despite elevated borrowing costs as the US Federal Reserve held interest rates steady rather than delivering anticipated cuts, according to the S&P Global Ratings assessment. The report cited S&P Capital IQ data in noting the sustainable segment held up better than the broader capital markets.
Strong momentum produced $5 billion of sustainable issuance in the first quarter including $4 billion in January alone before a second-quarter pickup exceeded $2 billion following an April ceasefire and a subsequent US-Iran memorandum of understanding in June. S&P Global Ratings highlighted how expanding output from Qatari issuers helped balance significant declines in other parts of the region including Turkiye even as the United Arab Emirates and Saudi Arabia continued to lead the market. Those two countries accounted for roughly 98 percent of overall issuance value during the period according to the midyear outlook.
Regional financial institutions drove the vast majority of activity with 80 percent of sustainable debt by value and 87 percent by volume as heightened uncertainty kept many non-financial corporations on the sidelines. Corporate sustainable debt issuance fell more than 80 percent with firms shifting toward direct bank loans and private placements for refinancing needs the report stated. S&P Global Ratings observed that this pattern left sustainable instruments demonstrating greater stability than conventional bonds across the first half.
A separate S&P Global Ratings global sustainable bond outlook projected issuance to hold near the 2025 level of $866 billion this year after a 19 percent decline the prior year with outstanding sustainable debt expected to reach about $5.5 trillion. In the Middle East the rating agency pointed to an estimated $50 billion maturity wall for Gulf sustainable debt between 2027 and 2030 that will require refinancing. National energy transition strategies new bond formats such as transition and blue bonds and continued demand for sustainable sukuk should support medium-term activity according to the assessment.
The positive longer-term view comes as global labeled sustainable bond issuance showed mixed performance with the World Bank reporting public sector volumes of $119 billion in the first quarter of 2026 alone. S&P Global Ratings maintained its constructive stance on Gulf sustainable debt despite the first-half slowdown attributing potential growth to alignment with broader energy transition goals across the region. The midyear report underscored how Qatar’s contribution provided a counterweight to contractions elsewhere helping sustain overall market momentum.
