Corporates drive GCC debt to records as sovereigns tap the brakes

GCC fixed income hit a record USD 207.1 bn in 2025, fueled primarily by private sector issuances, according to data from Kamco Invest (pdf). The record is just 0.1% above the previous all-time high set in 2024, but the composition of debt issuers changed significantly between the two years. Sovereign borrowing in the GCC actually fell by more than 20% y-o-y in 2025, but that dip was offset by a sharp rise in private sector issuances.

Behind the sovereign issuance drop: Total bond issuance across the GCC rose 18% y-o-y to USD 125.4 bn last year, but sukuk issuances fell 18.8% y-o-y to USD 81.7 bn during the year. Saudi Arabia, the region's heavyweight, slashed its sovereign sukuk issuance from USD 48.6 bn in 2024 to just USD 10.5 bn in 2025.

The split: The GCC fixed income issuer market moved closer to a 55% sovereign, 45% corporate split. In Saudi Arabia, corporate sukuk issuance rose to USD 31.7 bn in 2025 from USD 21.0 bn the year before.

Kuwait and Egypt were the outliers

While the UAE saw bond issuances drop by USD 5.6 bn to USD 44.4 bn, other regional players went on a borrowing spree. Kuwait saw the most dramatic spike, with bond issuances jumping to USD 17.6 bn in 2025 from just USD 800 mn the year prior. Saudi Arabia ramped up bond issuance by some 30.8% to USD 40.1 bn, even as its sukuk issuances fell 39.4% y-o-y. Egypt also tapped the market aggressively, with bond issuances rising more to USD 7.6 bn.

Despite Egypt’s increased activity, total bond issuance from non-GCC MENA countries declined overall in 2025.

What to expect in 2026: Cheaper money and deficit financing

Kamco expects issuances to remain “elevated” this year, supported by expectations that GCC will cut interest rates in line with the US Federal Reserve. Kamco estimates that around USD 85.4 bn of issuance in 2026 will be driven by maturity refinancing, with a further USD 60 bn linked to deficit financing, even as headline fiscal gaps narrow.

Expect Saudi Arabia and Kuwait to lead sovereign issuance volumes as they fund projected budget deficits. Saudi Arabia’s overall financing needs are projected to drop significantly to USD 58 bn in 2026, down from USD 107 bn in 2025. The Kingdom has already tested investor appetite early, raising USD 11.5 bn in the first week of 2026 after attracting more than USD 29 bn in orders — eventually pricing inside initial spread guidance.

MARKETS THIS MORNING-

Stronger expectations of a snap election in Japan pushed the Nikkei to fresh highs, with the index up 1.6% in early trading. Other Asia-Pacific markets are also broadly in the green, with the exception of South Korea’s Kospi, which is just below the flatline. Wall Street futures are also marginally in the red this morning, after financial stocks pulled the S&P 500, Dow Jones, and Nasdaq back from this week’s records. Investors will be keeping an eye out for more earnings results today from Bank of America, Wells Fargo, and Citigroup.

THE CLOSING BELL: TADAWUL-

The TASI rose 1.4% yesterday on turnover of SAR 6.1 bn. The index is up 3.8% YTD.

In the green: Oasis (+10.0%), Chubb (+8.3%) and Abo Moati (+6.2%).

In the red: Naseej (-9.9%), Thimar (-3.6%) and Ataa (-2.7%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.3% yesterday on turnover of SAR 22.3 mn. The index is up 1.6% YTD.

In the green: Axelerated Solutions (+9.8%), Edarat (+7.1%) and Balsm Medical (+4.6%).

In the red: Knowledge Tower (-6.1%), Sign World (-6.0%) and Service Equipment (-5.9%).