GCC debt markets to hit USD 1.25 tn this year

GCC debt markets are on track to break the USD 1.25 tn mark in 2026 as the region leans into borrowing to fund growth, up from USD 1.1 tn last year, according to Fitch Ratings’ GCC Debt Capital Markets MENA Monitor 2026 report (pdf). Issuers are borrowing to refinance maturing debt, fund deficits, and bankroll large projects at home, the report said. “Continued investor diversification, a wider range of funding tools and a potentially more supportive global rate environment should help sustain momentum,” Sarah Alyasiri, capital markets analyst at CF Trade, told EnterpriseAM, pointing to “a positive outlook for 2026 and beyond.”

Why it matters: In addition to a larger issuance volume, the flashing signal is the funding mix for the region’s massive infrastructure pipeline. With Fitch forecasting oil prices to stay range bound around USD 63/bbl in 2026, governments and corporates are pivoting to debt to plug funding deficits and keep giga-projects moving. The expected US Federal Reserve rate cuts (forecasted at 3.25% for 2026) will lower borrowing costs just as oil revenues soften, making the bond and sukuk markets the most attractive route for capital.

Saudi Arabia and the UAE are expected to be the primary engines, holding a combined 75% of the region’s outstanding debt (Saudi at 46%, UAE at 29%). Qatar comes at a distant third, with 12%, followed by Bahrain at 5%, and Kuwait, and Oman at 4% each. Sukuk now make up a record 41% of the total market, with USD-denominated sukuk issuance surging 72% last year, significantly outpacing the 26.1% growth seen in conventional bonds. The GCC accounted for 35% of emerging markets (ex China) USD issuance last year.

Who’s buying: As global portfolios branch out, Asian money has emerged as a steady source of support for GCC debt, Alyasiri added. Gulf bonds and sukuk offer “an attractive combination of relatively higher yields, strong credit quality and economic stability,” she said, helping position the region as a competitive alternative to comparable debt in both Asian and developed markets. Quality remains high, with 84% of Fitch-rated sukuk sitting in the investment-grade category, Fitch said.

Kuwait is back: After an eight-year hiatus, Kuwait re-entered the chat with USD 11.25 bn in sovereign bonds, signaling a broader regional return to international markets.

Downside risks: Fitch flagged that local-currency issuance is uneven and largely sovereign-driven, with limited participation from banks and corporates. Outside Saudi Arabia — where SAR issuance is more active — most issuers remain reliant on USD markets, leaving funding strategies exposed to global liquidity and rate cycles. The ratings agency also highlighted widening gaps in market sophistication, with Saudi Arabia and the UAE pushing ahead with structural reforms, including fixed-income market-making in Saudi and a broader Islamic finance strategy in the UAE. Qatar expanded its primarydealer framework and, alongside the UAE, issued digitally native notes.

What’s next

Watch for a rise in alternative funding: While public markets are growing, Fitch notes that Saudi issuers are increasingly utilizing private credit and syndicated financing to diversify their toolkit.

Also expect a surge in capital instruments: “If economic growth continues north of 4%, [Saudi] banks need to expand their capitalization and revisit their risk matrix so it fits better with what’s going on in the economy, which is very serious,” Ihsan Buhulaiga, a Saudi economist, told the Financial Times. “You cannot just sit pretty and say ‘OK, we’ll continue as usual as we used to do in 2010.’ No, things are different now.” Saudi banks’ loan-to-deposit ratio climbed to around 106.2% by 9M 2025, well above UAE peers at roughly 75%, according to a report by Alvarez & Marsal, reflecting how credit growth has outpaced deposit inflows and pushed banks toward external funding sources.

MARKETS THIS MORNING-

Markets are rebounding from this week’s bout of volatility, riding the high of US President Donald Trump walking back on previous threats to impose tariffs on EU countries over Greenland. Asia-Pacific markets are uniformly in the green in early trading, led by South Korea’s Kospi, buoyed by Samsung SDI, Samsung Electronics, and Doosan. US markets are also on track to open in the green later today on the same tailwinds.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.3% yesterday on turnover of SAR 4.7 bn. The index is up 4.4% YTD.

In the green: Malath Insurance (+10.0%), Walaa (+10.0%), and UCA (+10.0%).

In the red: Nofoth (-3.0%), Sieco (-2.7%), and Amak (-2.3%).

THE CLOSING BELL: NOMU-

The NomuC remained unchanged yesterday on turnover of SAR 13.7 mn. The index is up 0.3% YTD.

In the green: Alhasoob (+7.7%), United Mining (+7.0%), and Alshehili Metal (+5.4%).

In the red: NGDC (-9.7%), Amwaj International (-7.1%), and Paper Home (-6.2%).

Corporate actions

United International Transportation Company’s (Budget Saudi) board recommended a 33.7% capital increase to SAR 1 bn to support its growth plans and shore up its balance sheet, according to a filing to the bourse (pdf). The capital hike will be funded by capitalizing SAR 263.8 mn of retained earnings and will raise the company’s share count from 78.2 mn to 104.5 mn. Shareholders will receive one bonus share for every three existing shares held. The move needs shareholders approval when they meet on 19 February.