Diving into the world of regional debt markets

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WHAT WE’RE TRACKING TODAY

Latest Saudization push now live

Good morning, friends. It is another morning with the latest developments in the regional war dominating the global news cycle. Meanwhile, at home, we are looking at what this means for regional debt markets.

Watch this space

LABOR — Higher Saudization rates in marketing and sales professions are now in effect after the grace period ended, the Human Resources Ministry said in a statement. The localization rate is now 60% for private sector establishments with three or more employees in these roles. A minimum monthly salary of SAR 5.5k has also been set for Saudi employees to be counted within marketing Saudization quotas.

Ramping up the push: The Ministry also expanded its 100% Saudization mandate earlier this month to cover 69 administrative support professions, covering all private sector entities employing at least one worker in those roles.

Data point

USD 160.4 bn — that’s where Saudi Arabia’s holdings of US Treasuries stood in February 2026, rising by USD 25.6 bn m-o-m in the fastest monthly increase on record, according to data from the US Department of the Treasury. That’s the highest level in six years, putting the Kingdom in 17th place among the largest foreign holders of US debt that month.

The increase was driven by a surge in short-term Treasuries, which jumped 91% m-o-m to USD 54.6 bn, lifting their share of total holdings to 34% from 21% in January. Long-term bonds, meanwhile, edged slightly lower to USD 105.8 bn, accounting for 66% of the portfolio.

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The big story abroad

The US seized an Iranian cargo ship for allegedly attempting to breach its naval blockade, which President Donald Trump previously said will remain in full force until a peace agreement is signed. Tehran pledged to strike back and said it will not take part in a second round of ceasefire talks, upending Washington’s plans to kick off a fresh round of negotiations before the ceasefire expires tomorrow.

Oil markets jittered at the development, with Brent crude futures jumping over 5% to USD 94.90 a barrel. And we expect the rally that pushed the S&P 500 to fresh highs last week to reverse course when markets open later today as hopes of easing tensions unravel. US futures were broadly in the red this morning.

Seemingly undaunted by the turmoil, Asian markets are up in early trading this morning, with Japan’s Nikkei rising by around 1% and South Korea’s Kospi gaining around 1.3%.

Economists are warning that the conflict’s aftermath will surely harm the US economy, triggering long-lasting inflation, the Financial Times reports. “What we see is that short-term inflation expectations have moved up here in the US,” IMF Managing Director Kristalina Georgieva told the FT.

And in the world of tech and sports, Chinese-made humanoid robots clinched a victory over their human competitors in a half-marathon race in Beijing yesterday. A synthetic marathoner made by Chinese smartphone brand Honor — a Huawei spinoff — managed to break the world record for the half-marathon, signalling vast improvements from last year’s trial which most of the robots failed to complete.

Regional debt markets edge back from the brink

Are regional debt markets thawing? We may be turning a corner on sky-high spreads after a war risk premium that has crept into regional notes since the outbreak of the war begins to narrow. While borrowing costs haven’t fully retreated to pre-war levels, analysts tell EnterpriseAM the market has grown out of a defensive crouch and into a cautious bid-only rally.

“[Spreads] have tightened significantly. We're not back at pre-war levels yet, but we're pretty close on high-yield and investment-grade names,” Zeina Rizk, partner and portfolio manager at Amwal Capital, tells EnterpriseAM. This is a sharp reversal from early April, when Rizk told us that market jitters made it nearly impossible to build order books without offering “meaningful concessions.”

Today, sentiment has flipped. “It looks like there is appetite in the market and [liquidity] is being put to work,” she says.

This comes as part of a broader market recovery (read this morning’s Planet Finance, below) that has also seen equities rally across the world on optimism that the ceasefire might be extended or turned into a permanent end to the war.

The market hasn’t fully shaken off the risk: A 20-30 bps “geopolitical cushion” remains, “given the fragility of the situation and broader uncertainty in global rates,” Sarah Alyasiri, financial strategist at CFI Financial Global — who accurately predicted that spreads would tighten quickly in a de-escalation scenario — tells us. “The key driver now is not just geopolitics, but also the rates backdrop,” she said. Meanwhile, Rizk noted that it’s too early to quantify the risk premium.

The logic is circular: Higher oil prices, driven by the conflict’s tail-end, could keep inflation sticky, forcing central banks to delay rate cuts — or worse, hike them — which regional issuers have been banking on for 2026.

Call it a side door

“We haven’t seen issuers come to market in a normal roadshow,” but sovereigns are aggressively tapping private placements, Rizk tells us. In the last 10 days alone, we’ve seen a flurry of investment-grade activity in Abu Dhabi, Kuwait, and Qatar, which Rizk noted were “flat to the curve, so they did not have to pay up.”

“Primary markets need more stability [...] I don’t expect a quick rebound in issuance,” Muhammad Ahsan, senior head of treasury, global markets, investment banking, and international business at Bank Nizwa said. He added that primary activity “will take some more time to revive.” Both Ahsan and Rizk agreed that clarity and durability are key for primary debt markets to fully reopen.

The waiting game

Not everyone is rushing back to the trough. While top-tier sovereigns and energy giants can now move, Saudi gigaprojects, developers, and more leveraged infrastructure firms are still in wait-and-see mode, Alyasiri says. She previously identified these sectors as the “most sensitive” to pricing strikes due to their reliance on phased issuance.

The good news? They have a buffer: Many of these entities — corporates, banks, and real estate developers — front-loaded their 2026 needs during a massive debt spree in 4Q 2025 and early this year, Ahsan previously told us. “[They] are not under immediate funding pressure and prefer to delay issuance rather than lock in higher costs, so the market is reopening but in a selective and gradual way,” Alyasiri said.

The most dangerous trap right now is a lack of differentiation

Current pricing doesn’t distinguish between the strong and weak quasi-sovereign balance sheets, Alyasiri says. The market is currently operating on the assumption that “implicit government support” is a blanket assurance — an assumption she previously warned would be tested if global liquidity stayed tight.

A selective repricing is looming: “While the ceasefire reduces immediate pressure, it does not fundamentally change the underlying risk dynamic — it just postpones it,” she added. For now, the region is enjoying a post-war honeymoon, but for the debt markets, the real price of money is still being decided.

Acwa lands another big power purchase ticket

Acwa inked a SAR 11.5 bn long-term power purchase agreement with the Principal Buyer for the Rabigh 2 IPP expansion, according to a disclosure. The combined cycle gas turbine plant will add some 2.3 GW capacity to the system.

What it covers: The contract includes the development, financing, construction, ownership, and operation, alongside a 380 kV substation extension to integrate the plant into the grid. Acwa holds 40%, while Saudi Energy — previously the Saudi Electricity Company — owns 40%.

Rabigh 2 isn’t a new development — it’s an expansion of an existing independent power project that has been operating for years under Saudi Arabia’s private power model. The original project dates back to 2013. In parallel, theRabigh 1 project remains active, where Saudi Energy signed a 25-year energy conversion agreement with the Principal Buyer to purchase power from the 1.2 GW, SAR 5.33 bn expansion project earlier in January.

Why it matters: Gas-fired combined-cycle plants can hit efficiency rates of up to 60%, compared to just 30% for crude-fired units — complementing the Kingdom’s liquid fuel displacement program.

A new model for financing Saudi fine dining

Fine dining in Saudi is facing a capital gap — and this startup claims it has the solution. We talked to Zeid Husban, CEO of the recently launched premium dining platform Spice, who pulled back the curtain on why traditional banking often leaves a bitter taste for restaurateurs and how their new “dining capital” model is designed to fund expansion without adding debt or diluting ownership.

Why banks fall short

One size fits none: Traditional banks often treat high-end bistros like any other business, applying standard credit models that overlook the sector’s seasonality, brand sensitivity, and exposure to operating volatility, Husban tells EnterpriseAM. “Traditional financing where the burden of loans grows irrespective of revenue has proven that it's not agile enough for modern restaurant owners,” he added, noting that limited incentives and the lack of partners also leave many F&B businesses without access to tailored growth capital.

Restaurants are also squeezed on margins. Premium dining venues are balancing high operating costs and competition while trying to maintain guest experiences without leaning on reductions. These hurdles are compounded by geopolitical uncertainties and a wider unpredictable operating environment, making it harder to stabilize footfall and revenues, Husban said.

The alternative funding structure

The zero-debt model: Spice’s shariah-compliant model provides upfront funding by pre-purchasing future dining credit instead of issuing loans. Customers later redeem that credit through the platform when dining at partner venues.

The structure links funding to actual customer spend, avoiding fixed repayment obligations and reducing balance sheet pressure. Husban says the model aligns incentives by tying returns to performance rather than to time-based repayments, while also channeling demand through the platform.

Why it matters now: This pay-on-performance model is especially valuable amid current geopolitical tensions, giving venues more flexibility in managing their finances during unpredictable trading conditions, Husban argues.

On the consumer side, the app allows diners to discover locations, book tables, pay in-app, and earn 20% rewards on every dining experience.

Looking ahead

Fine dining shifts upmarket: Husban, an ex-Chief Strategy Officer at Foodics, expects Saudi Arabia’s fine dining segment to expand alongside tourism and broader foodservice growth, with demand shifting toward more experience-led concepts. Spice aims to partner with hundreds of venues across the Kingdom and deepen its presence in more cities over the next five years.

Spice is cooking up a global expansion: While Saudi Arabia is the initial focus of the firm’s expansion, the platform also plans to expand into the GCC and Europe, where similar structural challenges in the sector exist.

Sisco Holding names Mauricio Zuazua as Group CEO

Sisco Holding tapped Mauricio Zuazua (LinkedIn) as Group CEO effective yesterday, according to a disclosure to Tadawul. Zuazua was most recently Middle East and Africa chair at Kearney and brings over 25 years of experience across infrastructure, transport, logistics, and industrial sectors globally.

STC bundles Netflix into fiber packages

STC deepens Netflix tie-up to bundle streaming on STC tv

STC group extended its partnership with Netflix to expand streaming access via its STC tv platform, according to a press release. Under the agreement, customers on Baity fiber packages will gain access to Netflix and other streaming services through STC tv, with the package currently in testing ahead of a wider rollout in early summer. Customers will also be able to bundle multiple subscriptions at a reduced rate.

Investors are loading up on defense exposure

US investors are raising defense exposure, betting that geopolitically driven military spending will stay elevated for years, the Financial Times reports. The shift is being driven by conflicts including Russia’s invasion of Ukraine and the US-Iran war as well as rising defense budgets that have brought the sector back into favor after years of ESG-related caution.

Why defense?

Bigger budgets, fewer ESG brakes: Global instability has pushed Western governments to ramp up military spending. Europe’s defense spending rose 60% between 2020 and 2025, while the US has proposed a USD 1.5 tn military budget for 2027, up from USD 901 bn this year. ESG constraints that once weighed on defense allocations have also eased, particularly in the US, where political pushback is reframing the sector as a national and social priority.

Not just about current conflicts: Investor positioning is increasingly driven by expectations of future escalation, including a potential Russia-NATO confrontation, a Taiwan crisis involving China and the US, and wider Middle East instability. This new outlook reframes defense as a “multiyear demand story” rather than a cyclical trade, State Street Investment Management’s Matthew Bartolini told the Financial Times.

Tracking the capital shift

Institutional allocations on the rise: Annual US public pension commitments to defense-focused private equity funds more than doubled between 2022 and 2025, according to Dakota Marketplace data cited by the salmon-colored paper. The trend has carried into 2026, with double-digit growth in 1Q defense-focused fund commitments, even as broader private equity allocations declined, based on FT analysis of public data.

Defense exposure is also climbing in listed markets: US defense-focused exchange-traded funds (ETFs) recorded net inflows of USD 4.8 bn in 1Q 2026, up from USD 283 mn a year earlier. The S&P Aerospace & Defense Select Industry Index has risen 142% since Russia’s invasion of Ukraine in 2022, compared with a 64% gain in the S&P 500 over the same period.

Defense funds have also scaled up fast: Arlington Capital Partners raised USD 6 bn for its latest defense-focused fund in October, up 57% from its predecessor with backing from nearly a dozen public pension plans. Invesco’s Aerospace & Defense ETF has also grown to USD 8.4 bn from USD 653 mn in 2022, fueled by sustained inflows and rising investor interest, Invesco’s Rene Reyna said.

BUT- Is the trade getting crowded? Despite strong gains, some investors warn that valuations may be stretching. Defense stocks appear “overvalued on a growth-adjusted basis,” with concerns of overheating in parts of the market, Reyna said. Others, including Wyoming Retirement System trustee Paul O’Brien, question defense's broader economic contribution versus infrastructure or technology, noting that defense assets generate limited direct output unless deployed.

TASI	11,465	-0.8% (YTD: +9.3%)
MSCI Tadawul 30	1,541	-0.9% (YTD: +11.1%)
NomuC	23,069	-0.9% (YTD: -1.0%)
USD : SAR (SAMA)	USD 3.75 Sell	USD 3.75 Buy
Interest rates	4.25% repo	3.75% reverse repo
EGX30	52,373	+1.8% (YTD: +25.2%)
ADX	9,921	0.0% (YTD: -0.7%)
DFM	5,987	+1.0% (YTD: -1.0%)
S&P 500	7,126	+1.2% (YTD: +3.9%)
FTSE 100	10,668	+0.7% (YTD: +7.2%)
Euro Stoxx 50	6,058	+2.1% (YTD: +4.6%)
Brent crude	USD 96.30	+6.6%
Natural gas (Nymex)	USD 2.67	+1.0%
Gold	USD 4,880	+1.5%
BTC	USD 73,859	-2.4% (YTD: -15.7%)
Sukuk/bond market index	917.54	-0.7% (YTD: -0.2%)
S&P MENA Bond & Sukuk	152.07	+0.3% (YTD: +0.1%)
VIX (Volatility Index)	17.48	-2.6% (YTD: +20.5%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.8% yesterday on turnover of SAR 4.9 bn. The index is up 9.3% YTD.

In the green: Nice One (+6.3%), Sport Clubs (+5.5%), and Lumi (+5.3%).

In the red: Entaj (-6.1%), East Pipes (-3.4%), and Saudi Energy (-3.0%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.9% yesterday on turnover of SAR 20.4 mn. The index is down 1.0% YTD.

In the green: Sign World (+9.4%), Aictec (+6.3%), and Molan (+5.4%).

In the red: Service Equipment (-8.9%), Shalfa (-8.3%), and First Avenue (-6.8%).

CALENDAR

APRIL

20-22 April (Monday-Wednesday): Sports Investment Forum (SIF), Riyadh.

MAY

3-9 May (Sunday-Sunday): The Global Sustainability Expo, The Arena Riyadh Venue.

19-21 May (Tuesday-Thursday): The Saudi Entertainment and Amusement Expo, Riyadh Front Exhibition and Conference Center.

24-28 May (Sunday-Thursday): Eid Al Adha holiday.

JUNE

15-17 June (Monday-Wednesday): Aluminum Arabia, The Arena, Riyadh.

21-24 June (Sunday-Wednesday): Saudi Food Exhibition and Conference, Riyadh Front Expo.

21-24 June (Sunday-Wednesday): Saudi Print & Pack, Riyadh International Convention & Exhibition Center.

21-24 June (Sunday-Wednesday): Riyadh International Industry Week, Riyadh International Convention & Exhibition Center.

21-24 June (Sunday-Wednesday): Saudi Plastics & Petrochem, Riyadh International Convention & Exhibition Center.

21-24 June (Sunday-Wednesday): Saudi Smart Logistics, Riyadh International Convention & Exhibition Center.

22-24 June (Monday-Wednesday): The Future Hospitality Summit, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

JULY

6 July-23 August (Monday-Sunday): Esports World Cup, Riyadh.

AUGUST

31 August-3 Sep (Monday-Thursday): Leap Tech Conference, Riyadh Exhibition & Convention Center - Malham.

SEPTEMBER

9-10 September (Wednesday-Thursday): Procurement and Supply Chain Futures Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

9-10 September (Wednesday-Thursday): Real Estate Supply Chain Forum, Mandarin Oriental Al Faisaliah Hotel, Riyadh.

15-17 September (Tuesday-Thursday) The Global AI Summit, King Abdulaziz International Convention Center, Riyadh.

23 September (Wednesday): Saudi National Day.

OCTOBER

12-15 October (Monday-Thursday): World Energy Congress, Riyadh.

26-28 October (Monday-Wednesday): ACHEMA Middle East, Riyadh International Convention & Exhibition Center.

NOVEMBER

24-28 November (Tuesday-Saturday): Aero Middle East and Sand & Fun, Thumamah Airport, Riyadh.

Signposted to happen sometime in 2026:

2H: Sabic’s USD 6.4 bn Fujian project in China to start production;
September: Saudi Paper and Packaging Expo, Riyadh International Convention & Exhibition Center;
November: The UN Trade and Development Global Supply Chain Forum to take place in Saudi Arabia;
November: The Esports Nations Cup, Riyadh;
The World Economic Forum’s Global Collaboration and Growth Meeting, Jeddah;
SkyMove Air Cargo MENA, Riyadh;
The Intervision international music competition will take place in Saudi Arabia.

Signposted to happen sometime in 2027:

The World Water Forum takes place in Riyadh;
The Ocean Race finishes in Amaala on the Red Sea;
Riyadh-Kudmi transmission line to be completed;
Capital Markets Forum takes place in March in Riyadh.

Signposted to happen sometime in 2Q 2027:

The Hail Region Water Networks Project is expected to be completed.

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