GCC share of emerging market USD debt climbs to 35% in 1Q -Fitch

Gulf countries accounted for over 35% of all non-China emerging market USD debt issued in 1Q 2025, up from 25% in 2024, according to Fitch Ratings’ latest debt capital markets (DCM) analysis. Governments and corporates in the region are increasingly turning to capital markets to fund budgets, diversify financing, and support major infrastructure projects, the rating agency said.

By the numbers: The GCC’s total debt market size surpassed USD 1 tn across all currencies by the end of March, up 10% y-o-y. Quarterly issuance stood at USD 89 bn, up 11% from 4Q 2024 but down 3% y-o-y.

Sukuk under pressure, conventional bonds rising: Islamic bonds made up 40% of total debt, though sukuk issuance slumped 51% y-o-y in 1Q to USD 18.2 bn. In contrast, conventional bond issuance rose 29%. Still, 83.5% of Fitch-rated GCC USD sukuk are investment-grade, with 57.8% rated in the A category and the majority carrying stable outlooks. Kuwait Financial Center Markaz pegged the figure at USD 17.8 bn.

Sustainability-linked issuance is gaining ground: ESG-related issuance across the GCC has now exceeded USD 50 bn, driven by initiatives such as the UAE’s Sustainable Islamic M-Bills and Qatar’s green finance framework. Fitch also highlighted growing investor and regulatory support for green and socially responsible debt.

Market maturity varies across the bloc: The UAE and Saudi Arabia continue to lead in terms of market depth and development. In contrast, foreign investor participation in local currency DCMs in Kuwait, Bahrain, Qatar, and Oman remains limited due to the lack of Euroclear or Clearstream links. In Saudi Arabia, foreign holdings of local government debt rose to 7.7% in 1Q from 4.5% in 2024.

Looking ahead: Fitch expects issuance momentum to continue, citing a “healthy pipeline,” supported by strong regional and Islamic investor liquidity. While the agency noted that “the region’s credit quality remains resilient” — with no rated sukuk or bonds defaulting in 2024 or 1Q 2025 — fiscal pressure could intensify due to global macro uncertainties. Brent crude is forecast to average USD 65 through 2026, a level that may widen deficits in Saudi Arabia and Bahrain. By contrast, Abu Dhabi, Qatar, and Kuwait are expected to remain fiscally buffered due to their sovereign wealth assets.

BACKGROUND- Fitch had said earlier the UAE will be the most active among emerging markets in 2025 — particularly in sukuk. The UAE’s DCM grew 8.3% y-o-y to USD 309 bn in 1Q 2025, with issuances surging 109% y-o-y to USD 29.1 bn. The country ranked as the second-largest DCM in the GCC and fourth among emerging market USD debt issuers (ex-China), buoyed by sukuk growth, ESG momentum, and robust USD-denominated issuance.

THE CLOSING BELL: TADAWUL-

The TASI fell 1.1% on Thursday on turnover of SAR 5.1 bn. The index is down 4.1% YTD.

In the green: SPPC (+6.2%), Tawuniya (+5.2%) and EIC (+2.8%).

In the red: Saudi Cement (-5.8%), Almoosa (-5.4%) and SAB (-5.1%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.5% on Thursday on turnover of SAR 19.9 mn. The index is down 10.6% YTD.

In the green: Multi Business (+4.5%), FAD (+4.5%) and Almohafaza For Education (+4.0%).

In the red: Clean Life (-6.4%), Leaf (-6.4%) And Aljouf Water (-5.9%).

CORPORATE ACTIONS-

Foods Gate Trading Company lined up approval from the Capital Markets authority to raise its capital to SAR 31.5 mn from SAR 21 mn by issuing one bonus share for every two existing shares, according to a statement. The capital increase will be financed via retained earnings, raising the total number of shares to 3.15 mn.