GCC banks are on course to set a new debt issuance record in 2025, with USD-denominated debt set to surpass USD 60 bn this year — or USD 40 bn excluding certificates of deposit (CDs), Fitch Ratings said in a research note. The momentum — which follows last year’s high — is expected to continue into 2026, driven by strong credit growth, Fed rate cuts, refinancing needs, and tight domestic liquidity in Saudi Arabia.

GCC banks have accounted for around 30% of USD issuance by emerging-market banks so far this year — or over 60% when excluding Chinese banks.

Issuances from GCC banks this year have already reached nearly USD 55 bn, significantly higher than the USD 36 bn total in 2024 and well above the USD 23 bn in maturities due in 2025. Excluding CDs, issuance stands at USD 36 bn, already exceeding Fitch’s expectations at the start of the year. Sukuk accounted for nearly half of the non-CD issuance.

Saudi banks are dominating activity, with USD 28.3 bn in issuance, followed by banks in the UAE (USD 11 bn), Qatar (USD 8 bn), and Kuwait (USD 7 bn).

Subordinated debt issuance has surged to USD 14.5 bn, already doubling last year’s total and accounting for nearly 40% of non-CD issuance. Saudi banks were the main contributors, issuing USD 11.2 bn to support lending tied to Vision 2030 and in anticipation of tighter capital regulations. They returned to the USD Tier 2 market for the first time since 2020, making up the majority of the USD 6 bn in Tier 2 issuance by GCC banks so far this year.

AT1 issuance has also hit a new high of USD 8.45 bn in 2025, up from a total of USD 5.6 bn last year. Fitch expects most of the record USD 10 bn in AT1 instruments with first call dates in 2026 to be redeemed, due to high reset spreads and favorable market conditions.

UAE and Qatari banks have been big on senior unsecured debt issuance on the back of refinancing needs and a desire to diversify funding. This includes ESG bonds and sukuk, as well as activity in the Taiwanese Formosa market. UAE banks raised about USD 3.5 bn in floating-rate notes, while Qatari banks raised USD 1 bn. Fitch expects issuance from UAE banks to remain active given their good liquidity and solid net foreign asset positions.

Short-term CD issuance has also seen a sharp rise, reaching USD 18 bn so far in 2025, compared to just USD 3 bn in 2024. Nearly 70% of this came from Saudi banks, attracted by cheaper offshore funding available through major financial hubs such as New York, London, Hong Kong, and Singapore.

Looking ahead, Fitch expects strong issuance to continue in 2026, supported by an additional USD 36 bn in maturities, ongoing credit growth in Saudi Arabia and the UAE, and persistent tight liquidity in the Saudi market. Liquidity will remain a key credit challenge for Saudi banks next year, which it expects to lead to continued reliance on external funding. The sector’s net foreign liability position is likely to remain above 3% of total assets, though foreign funding still represents a modest 11.4% of sector liabilities as of end-August. The recent launch of residential mortgage-backed securities in Saudi Arabia could provide a new source of local-currency funding, given banks’ significant mortgage portfolios.

MARKETS THIS MORNING-

Asian markets are mixed this morning as global investors await the US Federal Reserve’s interest rate move later today. Japan’s Nikkei reversed earlier losses to rise nearly 0.2%, while Hong Kong’s Hang Seng is also up 0.7%. Meanwhile, China’s CSI 300 was flat at the open, and South Korea’s Kospi lost 1.1%.

Over on Wall Street, futures are little changed after a losing session for both the S&P 500 and Nasdaq yesterday.

TASI

10,519

+0.9% (YTD: -12.6%)

MSCI Tadawul 30

1,369

+0.8% (YTD: -9.3%)

NomuC

25,023

+0.3% (YTD: -20.5%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

5.0% repo

4.5% reverse repo

EGX30

34,841

-0.9% (YTD: +17.2%)

ADX

10,064

+0.3% (YTD: +6.8%)

DFM

6,000

-0.7% (YTD: +16.3%)

S&P 500

6,607

-0.1% (YTD: +12.3%)

FTSE 100

9,196

-0.9% (YTD: +12.5%)

Euro Stoxx 50

5,372

-1.3% (YTD: +9.7%)

Brent crude

USD 68.50

+1.6%

Natural gas (Nymex)

USD 3.10

+2.0%

Gold

USD 3,725

+0.2%

BTC

USD 116,877

+1.3% (YTD: +24.9%)

Sukuk/bond market index

917.83

+0.1% (YTD: +1.7%)

S&P MENA Bond & Sukuk

150.56

+0.1% (YTD: +7.6%)

VIX (Volatility Index)

16.36

+4.3% (YTD: -5.7%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.9% yesterday on turnover of SAR 4.3 bn. The index is down 12.6% YTD.

In the green: Cenomi Retail (+10.0%), Retal (+5.9%) and SGS (+5.6%).

In the red: Care (-1.8%), Taprco (-1.3%) and Riyadh Cement (-0.9%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.3% yesterday on turnover of SAR 40.6 mn. The index is down 20.5% YTD.

In the green: Sure (+8.5%), Alhasoob (+8.4%) and Apico (+7.5%).

In the red: Hamad Bin Saedan Real Estate (-12.9%), Naf (-10.5%) and Horizon Food (-4.9%).

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