MENA M&A were down 74% and bond issuances off 12% in 1Q as spreads widened on Gulf war

Pulse check: MENA capital markets ran out of road in March — shocking given the war and all, we know. Hell, so much has happened that it’s easy to forget that the quarter includes not just the war (and the run-up to it) but also the seasonal impact of Ramadan.

M&A activity collapsed 74% y-o-y in 1Q to USD 18.8 bn while bond issuance fell 12% to USD 48.1 bn — and in both markets, nine of every ten meaningful transactions closed in January, our review of the data suggests. The pattern is identical across equity and debt: Front-loaded activity through Ramadan, then a sharp deceleration and an effective shutdown by mid-March as the war on Iran pushed spreads wider and investors tapped the brakes amid rising uncertainty.

On the M&A side, LSEG data shows inbound activity at a 10-year low of USD 4.6 bn (-90%) and outbound at a two-year low of USD 11.5 bn (-55%). The headline transactions all closer early: Adia’sUSD 4 bn exit from its 18.4% stake in Pension Insurance Corporation, ePointZero’sUSD 2.3 bn purchase of Traverse Midstream, and Aluminium Bahrain’sUSD 2.2 bn acquisition of Aluminium Dunkerque. Goldman Sachs topped the league tables on three deals worth a combined USD 34.8 bn, including PIF/Savvy’s USD 6 bn buy of Shanghai Moonton.

The debt market told a very similar story. Saudi Arabia carried 58% of regional issuance volume with USD 32.54 bn — including a USD 11.42 bn four-tranche January sale and Aramco’s USD 3.95 bn raise — but the GCC effectively shut down by mid-March as spreads widened 20-30 bps and made fresh issuance uneconomic. Burjeel Holdingspaused its USD 1.5 bn debut Islamic bond in the most concrete signal of the freeze — CEO Shamsheer Vayalil’s remarks that “spreads have changed” is the entire 1Q debt story in three words.

Sukuk fell harder than conventional paper, the data shows, dropping 17% y-o-y to USD 14.6 bn — just 30% of total proceeds, the lowest share in three years.

The structural drivers, though, remain intact. Tim Ingrassia, who leads M&A globally for Goldman Sachs, sees global pure M&A hitting USD 3.8 tn this year — surpassing both 2021 and 2025 — driven by what he calls the “tyranny of terminal value”: AI is calling into question long-term business models, and investors are bidding on year-six-to-infinity worth, not year-one. PE distributions globally sit at a 16-year low, making exits a priority for GPs. Moreover, regional sovereigns and corporates with maturing debt don’t have the luxury of staying away from the markets indefinitely.

What the 1Q numbers really capture is timing — not some enduring or structural change to fundamentals. Pipelines are loaded and 2Q shows that markets are coming back to life, albeit cautiously: Emirates NBD’sUSD 750 mn AT1 test, XRG’s29 US natgas deals under review, and Egypt’sUSD 1 bn sovereign tap on the LSE are early signs that the back half of the year will likely be “okay” at least. January’s pace looks more like a baseline than a peak — provided the ceasefire in the Gulf stays in place, helping spreads tighten.