Fitch Highlights Kuwaits Sukuk Law Impact
Fitch Ratings has downgraded Kuwait's credit rating and affirmed that the new Sukuk law contributes to expanding the government's access to Islamic finance and accelerating the development of the debt market. The agency pointed out that the law allows for the issuance of sovereign Sukuk through a special purpose vehicle owned by the government, which enhances participation from Islamic banks and Sharia-compliant investors. By the end of June 2026, the Kuwaiti debt market was valued at approximately $52 billion, with the share of Sukuk decreasing to 18% of total debt instruments, down from 25% in the same period of the previous year. Bond issuances also declined to $16 billion in the first half of 2026, due to regional tensions, although issuance activity increased in July and August by nearly $9.1 billion, most of which was from the government. The report clarified that amending the Future Generations Fund Law strengthens government financing flexibility, but reliance on the fund may reduce incentives for financial reforms.
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