Keeping on the Sunny Side Sukuk

A Public Debt perspective on global sukuk markets and credit conditions in 2026

Ajeej Capital’s 2026 Public Debt Letter reviews the outlook for global sukuk markets and the broader fixed income environment. The note examines credit conditions, interest rate dynamics, and issuance trends across emerging and developed markets, with a particular focus on the role of sukuk within diversified portfolios and long-term capital allocation.

Over the past several years, fixed income markets have undergone a significant adjustment as central banks responded to inflation through higher interest rates. As monetary policy begins to stabilise, investors are reassessing the relative value of credit assets, duration exposure, and income-generating instruments across global markets.

Sukuk markets have continued to evolve during this period. Demand from institutional investors has broadened, while issuance has diversified across sovereign, quasi-sovereign, and corporate borrowers. The asset class increasingly sits within mainstream global fixed income allocations, rather than being viewed solely as a regional or specialist market.

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Key themes from the 2026 Letter

In the letter, we discuss:

• The outlook for global interest rates and their implications for fixed income investors
• Issuance and demand trends across international sukuk markets
• Credit quality considerations within emerging market debt
• The role of Islamic finance within institutional portfolios
• Why sukuk may offer diversification and defensive characteristics in uncertain macroeconomic conditions
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Sukuk instruments combine contractual income characteristics with asset-backed structures, which can provide different risk dynamics compared to conventional bonds. As global investors increasingly seek diversification, the asset class is becoming more relevant within multi-asset portfolios and long-term capital allocation frameworks.

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Read the full Ajeej Capital 2026 Public Debt Letter here

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This research reflects Ajeej Capital’s Public Debt investment strategy, focusing on global fixed income markets, sukuk securities, and credit opportunities across emerging and developed economies. Through its Public Debt platform, Ajeej invests in institutional-quality issuers, sovereign and corporate sukuk, and diversified credit instruments designed to provide income, capital preservation, and portfolio diversification. The firm’s approach to public debt investing emphasises disciplined credit selection, risk management, and long-term value creation across international markets.

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