War risks threaten Sukuk assets, issuance

GLOBAL: The ongoing Middle East war could result in partial or total loss events for a limited number of Sukuk, particularly those backed by assets exposed to potential attacks, according to S&P Global Ratings. Sukuk linked to industrial or commercial real estate, which account for 3% of rated Sukuk, are the most vulnerable. Damage to underlying assets could test the strength of legal structures and risk coverage mechanisms, the ratings agency noted.

The conflict is also likely to affect Sukuk issuance volumes in 2026, although the extent will depend on the duration of hostilities and their impact on the GCC region’s real economy.