MENA debt market narrows to bigger, higher-quality issuances as volume drops

Regional conflict has weighed on MENA debt markets, with bond issuance down 10% y-o-y to USD 129.7 bn in 9M 2026, LSEG said in a report seen by EnterpriseAM. But even as the ongoing geopolitical situation has roiled markets, it’s not the only factor at play: “The decline owes more to the second-order effects it set in motion across investor sentiment, interest rates, and credit spreads,” Andreas Anthes, head of multi-asset and absolute-return strategies at Mashreq Capital, is quoted as saying in the report.

Saudi Arabia led the pack, accounting for 42% of regional bond proceeds, with the government topping the region’s issuer ranking after raising more than USD 11.5 bn through a four-tranche international bond sale. The UAE followed with 26% and Qatar 13%.

Sukuk saw the sharpest drop: Regional sukuk issuance fell 39% y-o-y to USD 34.8 bn, accounting for 27% of total debt proceeds — its lowest share in five years. Market volatility has narrowed issuance windows, while sukuk can involve more complex structuring and execution than conventional bonds.

The market narrowed to bigger, high-quality transactions: GCC bond and sukuk issuance in 3Q 2026 totaled USD 34.8 bn, down 13.5% y-o-y, with dealcount falling to 45 from 136 — but average transaction size rose to USD 773 mn from c.USD 296 mn. Higher oil prices lifted inflation expectations and yields, pushing up financing costs. The US 10-year Treasury yield climbed from 4.58% at the start of 2025 to 5.31% early this month, while GCC credit spreads widened by around 60 basis points from pre-war levels. “The market has not closed. It has become more selective, favoring credit quality and penalizing weaker balance sheets,” Anthes says.

Financial institutions accounted for 47% of regional debt proceeds, followed by governments and agencies at 29%. Standard Chartered topped the bond league tables, managing USD 15.5 bn in issuance for a 12% market share. It also led regional sukuk issuance, while JP Morgan ranked second with USD 14.4 bn and an 11% share.

Renewed regional escalation remains a key downside risk. Around USD 13 bn in GCC banks’ USD-denominated debt is due in 4Q, while lower-rated issuers may have to offer higher premiums or postpone funding until 2027, Anthes explains.

MARKETS THIS MORNING-

Asian stocks traded higher today. South Korea’s KOSPI gained 3.1%, lifted by chipmakers Samsung Electronics, up 4.2%, and SK Hynix, up 5.2%. In Japan, Nikkei 225 added 1.7%.

THE CLOSING BELL: TADAWUL-

The TASI rose 2.3% yesterday on turnover of SAR 7.2 bn. The index is down 4.8% YTD.

In the green: BinDawood Holding (+10%), Qassim Cement (+10%), and Saudi Ceramic (+10%).

In the red: National Company for Learning and Education (-6.5%), Nahdi Medical (-4.8%), and Arabian Cement (-4.6%).

THE CLOSING BELL: NOMU-

The NomuC rose 1.5% yesterday on turnover of SAR 17.9 mn.. The index is down 7.6% YTD.

In the green: Khaled Dhafer and Brothers for Logistics Services (+18.4%), Horizon Educational (+11.2%), and Alfakhera for Mens Tailoring (+10.7%).

In the red: Alwaha REIT Fund (-8%), Dar Almarkabah for Renting Cars (-6.7%), and Naf Company for Feed for Industry (-4.8%).