Market Overview
The UAE’s debt capital markets have matured significantly over the past decade, evolving from a relatively illiquid, bank-dependent financing landscape to a diversified market encompassing sovereign, quasi-sovereign, and corporate issuance across both conventional and Islamic (sukuk) formats. Total outstanding UAE bonds and sukuk exceeded USD 230 billion by end-2025, making the UAE one of the largest debt markets in the GCC region.
The development of a liquid domestic yield curve, anchored by federal and emirate-level government issuance, has been a deliberate policy objective. The establishment of the Federal Government’s treasury bond programme in 2021 marked a structural milestone, providing a benchmark risk-free rate for domestic markets.
Sovereign and Quasi-Sovereign Issuance
| Issuer | Outstanding (USD bn, 2025) | Credit Rating (S&P/Moody’s) | Key Format |
|---|---|---|---|
| Abu Dhabi (sovereign) | 28.4 | AA / Aa2 | Conventional + Sukuk |
| Sharjah (sovereign) | 12.7 | BBB- / Ba1 | Conventional + Sukuk |
| Dubai (sovereign) | 18.2 | – / A3 | Conventional + Sukuk |
| Federal Government | 8.6 | – | T-Bills + Bonds |
| Mubadala | 14.8 | AA / Aa2 | Conventional |
| ADNOC | 11.2 | AA / Aa2 | Conventional |
| Emirates Airlines | 6.4 | – | Conventional |
| DP World | 9.8 | – / Baa3 | Conventional + Sukuk |
Abu Dhabi is the most active sovereign issuer, leveraging its AA credit rating to access global capital markets at competitive spreads. The emirate’s issuance strategy combines long-dated conventional bonds with periodic sukuk offerings, diversifying the investor base and supporting Islamic capital market development.
Sukuk Market Development
The UAE is among the world’s largest sukuk markets, with issuance spanning government, financial institution, and corporate sectors.
| Year | UAE Sukuk Issuance (USD bn) | Share of Global Sukuk (%) | Average Tenor (years) |
|---|---|---|---|
| 2021 | 14.2 | 8.4 | 6.2 |
| 2022 | 16.8 | 9.1 | 6.8 |
| 2023 | 19.4 | 10.3 | 7.1 |
| 2024 | 22.1 | 11.2 | 7.4 |
| 2025 Est. | 24.6 | 12.0 | 7.8 |
Sukuk issuance has grown at a compound annual rate exceeding 14% since 2021, outpacing conventional bond growth. Green sukuk have emerged as a notable innovation, with Abu Dhabi issuing one of the first sovereign green sukuk globally, combining Sharia-compliant structuring with environmental use-of-proceeds frameworks. This product evolution aligns with both the UAE’s Net Zero 2050 strategy and growing ESG-focused investor demand.
Credit Rating Analysis
| Entity | S&P | Moody’s | Fitch | Outlook |
|---|---|---|---|---|
| Abu Dhabi | AA | Aa2 | AA | Stable |
| Sharjah | BBB- | Ba1 | – | Stable |
| Ras Al Khaimah | A | A1 | – | Stable |
| UAE Banking Sector (avg) | A | A2 | A | Stable |
Abu Dhabi’s AA rating anchors the UAE’s sovereign credit positioning. The rating reflects low government debt-to-GDP ratios (approximately 10%), massive sovereign wealth fund reserves, and demonstrated fiscal prudence. The differential between Abu Dhabi and Sharjah credit ratings highlights the heterogeneity across emirates in terms of fiscal capacity and hydrocarbon endowment.
Yield Environment
The UAE’s debt market yields are influenced by US Treasury rates through the currency peg, augmented by sovereign and credit risk premia.
| Instrument | Yield (%, Feb 2026) | Spread over UST (bps) |
|---|---|---|
| Abu Dhabi 10Y sovereign | 4.18 | 42 |
| Abu Dhabi 30Y sovereign | 4.64 | 58 |
| Dubai 10Y sovereign | 4.52 | 76 |
| Sharjah 10Y sovereign | 5.34 | 158 |
| UAE corporate (IG avg) | 4.86 | 110 |
| UAE corporate (HY avg) | 6.42 | 266 |
Abu Dhabi sovereign spreads remain among the tightest in the emerging market universe, reflecting the credit quality premium. Dubai’s tighter implied rating, despite lacking a formal S&P rating, is evidenced by moderate spread levels that suggest market-implied investment-grade status.
Capital Market Development Initiatives
The CBUAE and the Securities and Commodities Authority have undertaken several initiatives to deepen domestic debt markets. The development of a repo market for government securities, the standardisation of sukuk documentation through the AAOIFI framework, and the facilitation of retail investor access to government bonds are among the priority workstreams.
The Abu Dhabi Securities Exchange and Dubai Financial Market have introduced fixed income listing and trading platforms, improving secondary market liquidity. These initiatives are designed to reduce the UAE’s historical dependence on international capital markets for primary issuance and build a robust domestic fixed-income ecosystem.
Outlook
The UAE’s debt markets are entering a phase of structural deepening. Federal government issuance will establish a comprehensive domestic yield curve, while continued sukuk innovation, particularly in green and sustainability-linked formats, will diversify the product set. The combination of strong sovereign credit fundamentals, expanding capital market infrastructure, and growing investor demand positions the UAE to become the GCC’s most developed debt capital market by 2031.