Fitch Ratings has reported an improvement in liquidity levels across most rated sukuk compared with March 2026, although it noted that overall trading conditions remain below pre-Iran conflict levels and are likely to stay constrained as geopolitical tensions persist.
According to Fitch, the recovery in liquidity is uneven and varies significantly depending on credit ratings, jurisdictions, sectors, currencies, and exposure to geopolitical risk.
The agency assesses liquidity using Bloomberg’s Liquidity Assessment Array (LQA), a model-based metric that scores securities from 1 to 100, with higher values indicating stronger liquidity and lower trading costs.
Fitch said investment-grade sukuk continued to outperform lower-rated instruments, recording an average LQA score of 66 as of June 9, compared with 64 in March 2026 and 72 in January 2026. In contrast, speculative-grade sukuk averaged 41, up from 33 in March but still below earlier levels, according to news reports.
Among rating categories, “B”-rated sukuk showed the most notable improvement in liquidity between May and June.
Sukuk issued by markets including Hong Kong, Malaysia, Indonesia, Qatar, Kuwait, and Saudi Arabia, as well as instruments issued by multilateral institutions, maintained the highest average liquidity levels.
At the same time, Fitch noted that bonds from the United States, Bahrain, Ireland, the United Arab Emirates, Kuwait, Egypt, and Qatar recorded the strongest month-on-month liquidity gains during June.
Sector-wise, asset-backed sukuk, sovereign issues, and multilateral sukuk continued to show the highest liquidity, with sovereign instruments also posting the sharpest improvement over the review period.
In Gulf markets, liquidity conditions remained mixed in US dollar-denominated instruments, with sukuk and conventional bonds showing broadly comparable performance. Sukuk outperformed bonds in Qatar, Oman, the UAE, and Bahrain, while bonds remained more liquid in Saudi Arabia and Kuwait.
Indonesia and Türkiye also showed strong performance in certain sukuk segments, with a notable share of issues achieving high liquidity scores above 70 and 80 respectively.
Malaysia retained its position as the most liquid sukuk market globally, with around 60% of outstanding volume scoring above 85, while Saudi Arabia saw more than half of its sukuk trading between 70 and 90.
Currency analysis showed Malaysian ringgit-denominated sukuk leading in liquidity, followed by euro and UAE dirham issuances, while US dollar-denominated sukuk—the largest segment of the global market—remained below January 2026 levels despite recent improvements.
Fitch concluded that while liquidity conditions in global sukuk markets are gradually recovering, sustained geopolitical uncertainty continues to weigh on overall market depth and trading activity.
