BAKU, Azerbaijan, June 17. Azerbaijan could see the first sukuk issuance of up to $500 million by 2030, reveals the latest report by the IsDB Group.

“We project that by 2030 (5-year projection), a debut sukuk issuance in Azerbaijan in the range of USD 500 million could reasonably take place as well, given its good sovereign credit profile and existing fiscal headroom. One key qualitative assumption is that the ecosystem factors fall into place (e.g. enabling regulatory support, legal amendments or reforms, etc),” says the report of the Islamic Development Bank Institute (IsDBI) and the International Islamic Trade Finance Corporation (ITFC) titled “Islamic Finance in Azerbaijan: Breaking New Ground” launched during the IsDB Annual Meetings in Baku.

Moreover, the IsDBI and ITFC also project that as Azerbaijan’s overall debt and overall Islamic finance markets grow, there could probably be capacity for subsequent issuances, such that subsequent issuances reach the USD 1.5 billion range by 2035 (10-year projection).

“Compared with the total conventional debt issuances in Azerbaijan, which we projected to grow from to 3.4 billion in 2025 to USD 8.8 billion by 2035, sukuk are projected to make up the equivalent of 9% of total conventional debt issuances in Azerbaijan by 2030, and 17% by 2035. This growth trajectory seems reasonable given the experience of other markets,” the report says.

As for the methodology, to project out the potential for sukuk in Azerbaijan for 2030 and 2035, the IsDBI and ITFC looked at actual historical examples of sukuk issuances in emerging Islamic finance markets, as well as debuts by well-established Islamic finance markets or growing hubs in non-OIC markets.

“For emerging Islamic finance markets, a debut issuance was typically in the USD 500 million range. Some examples include debut issuances by Pakistan (USD 600 million), Oman (USD 520 million), Indonesia (USD 500 million), and Maldives (USD 200 million). Additionally, for well-established Islamic finance markets or growing hubs in non-OIC markets, debut issuances were higher, typically in the USD 1 billion - USD 1.5 billion range. Some examples of include debut issuances by Türkiye (USD 1.5 billion), Egypt (USD 1.5 billion), the Philippines (USD 1 billion), and Hong Kong (USD 1 billion). Together, these eight country comparables helped triangulate rationally for sukuk potential in Azerbaijan. We also projected the overall debt issuance market in Azerbaijan to 2035 to provide context, using 2025 total debt issuance and applied a formula that assumed 10% year on year growth,” the report reads.