Gulf borrowers are increasingly seeing growing allocations from Asian investors, with DBS’s Clifford Lee telling Reuters that regular Gulf issuance in China’s onshore bond market could “unlock access to an over USD 20 tn market.” This comes as Asian investors are pivoting sharply toward GCC debt as uncertainty deepens in the world’s two largest economies — the US and China — making the region’s stability and diversification push look increasingly attractive on the global scene.

By the numbers: Bond issuance in MENA jumped 20% y-o-y to USD 125.9 bn in 9M 2025, putting the region on track for a record year. Meanwhile, borrowers in the Middle East secured USD 16 bn in syndicated loans from lenders in the Asia-Pacific so far this year, more than triple the USD 5 bn raised last year, as investors reprice US recession risks and brace for prolonged tariff volatility.

“Chinese investors [are] actively diversifying away from US-based investments,” HSBC Mena Debt Capital Markets Head Nour Safa told the newswire, adding that Chinese capital – often routed via Hong Kong, Singapore, and Malaysia – is now ramping up purchases across both loans and bonds.

Why it matters for the region’s diversification play: Analysts say the shift bodes well for GCC sovereigns and government-related entities trying to finance multi-year transformation plans at a time when oil-linked revenues are softer. IMF forecasts show the MENA region growing 3.9% this year and accelerating to 4.3% in 2026, outpacing a cooling global economy.

“Investors are being more cautious about US Treasuries,” Nomura’s Oliver Holt told Reuters, noting that high-rated Gulf issuers are capturing flows thanks to tighter spreads and stronger credit fundamentals. Asian allocations in GCC transactions climbed to 15-20%, up from 5-7% in early 2024, according to Emirates NBD Capital’s Ritesh Agarwal.

Demand is already influencing pricing: Asian investors took 40% of Qatar’s AA-rated, USD 1 bn, three-year bond last month, which was priced at just 15 bps over US Treasuries. Gulf credits also offer yield pick-ups versus similarly rated Asian bonds, UOB Asset Management CIO Chong Jiun Yeh noted. Meanwhile, early Gulf forays into Asia’s currency markets — from Sharjah’s RMB 2 bn, three-year Panda bond to Saudi National Bank’s first SGD-denominated bond — hint at a broader financing shift.

The upshot? With investors shying away from US exposure due to policy instability and China still under pressure, the Gulf’s relative macro stability, higher yields, and aggressive diversification agenda are making it a natural magnet for Asia’s capital and potentially positioning the region as a regular borrower in the world’s deepest bond market.

IN CONTEXT- Is equity fatigue becoming a tailwind for Gulf debt? MENA equity issuancehas struggled this year under valuation pushback and softer first-day performance. The region’s once-reliable IPO pop has all but evaporated, leaving several Emirati and Saudi floats postponed or trading below their offer prices. However, the very conditions weighing on equity capital markets — from US tariff uncertainty to slowing Chinese growth — seem to be creating a fertile backdrop for the region’s fixed income issuance.

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