Gulf debt gets pricier but demand holds as Saudi’s new markets chief eyes foreign ownership cap changes

Gulf paper may have gotten more expensive to issue this year, but the buy side has yet to blink. Fitch has Abu Dhabi’s 10-year sovereign notes at nearly double the premium over US Treasuries it did in January, and corporate spreads are wider now than they were in March. But when the books open, it’s clear that demand is available at almost any spread, with Saudi Real Estate Refinance Company and an Indian bank’s Dubai branch each seeing their debt issuances oversubscribed multiple times over.

Over on the equity side in Saudi Arabia, it’s becoming clear that the constraint was never price — it’s a foreign ownership cap that has yet to be taken down, and will be top of mind for the country’s new capital markets chief.

Saudi Arabia has a new chairman of its Capital Market Authority (CMA), and the market has already decided what it means. Mazen Al Sudairi — a former Al Rajhi Capital research chief who had been advising the cabinet — took over as Saudi Arabia’s new capital markets chief on 13 August, replacing Mohammed ElKuwaiz after nine years in the job, according to a Royal Order carried by the Saudi Press Agency. Bankers and investors are reading the swap the same way: Al Sudairi is the one who could move the reforms ElKuwaiz never got to, Bloomberg reports, citing people familiar with the matter.

At the top of the wishlist: Scrapping the 49% cap on foreign ownership. Saudi Arabia is the last major Gulf market still holding foreigners to a ceiling this tight. Morgan Stanley puts a number on what that’s costing the market — USD 4.3 bn in passive inflows if the ceiling goes to 75%, USD 7.4 bn if it disappears altogether, with Al Rajhi Bank standing to gain the most, as we reported last week. One catch: That move needs to happen by late-October or else it misses the index’s November review.

Foreigners aren’t the only ones with a wish list: Bankers want the IPO process fixed, too, saying the CMA’s habit of nudging issuers toward 30% retail allocation backfires when the retail demand is soft, leaving deals lopsided. They also want faster approvals and more breathing room on the six-month window companies get to actually list once they’re cleared, Bloomberg says.

Foreign money has kept coming anyway, rising from SAR 70 bn in 2017 to around SAR 450 bn now, per Argaam — and the CMA’s own figures put international holdings at SAR 590 bn as of 3Q 2025. But for a market this size, that’s still not enough.

The cost of borrowing in the Gulf keeps creeping up: Abu Dhabi’s 10-year USD sovereign bonds were trading at a 48 bps spread at 48 bps over US Treasuries as of 21 August against 27 bps in January, while the corporate USD curve spread over US Treasuries has widened to 115 bps against 79 bps in January, Fitch Ratings said in a new report shared with EnterpriseAM. The corporate spread is even wider than in March, when it was at 108 bps.

Abu Dhabi's 10-year yield is still the second-lowest in the Gulf, rising to about 5.2% by 21 August, after Qatar's 5% — up from roughly 4.5% in January.

Not everyone reads the widening the same way. Franklin Templeton’s Mohieddine Kronfol recently said that Gulf spread widening this year is a US Treasury story — rising Treasury yields pulling capital toward safe US paper and squeezing EM spreads generally — rather than a repricing of Gulf credit risk over war or geopolitics. He added that credit risk in Gulf debt markets remains within the same band it's held for five years. Fitch, however, attributes the sovereign and corporate widening to geopolitical risk premiums.

The Treasury backdrop: The 10-year Treasury yield hit a 20-month high of 4.75% last week before easing to around 4.64%; the 30-year touched a 19-year high above 5.34% before the Treasury doubled its long-bond buyback program to calm the selloff. Two-thirds of respondents in a Bloomberg Markets Pulse survey expect the 10-year to breach 5% before year-end — territory unseen since 2007.

Investors put in USD 18.7 bn of orders for USD 2.75 bn of Saudi mortgage paper. Saudi Real Estate Refinance Company (SRC) priced a dual-tranche international sukuk 6.8x covered, in what is the largest international USD-denominated GCC sukuk of 2026, according to a statement from Bahrain’s Al Salam Bank, a joint lead manager and bookrunner on the deal.

Union Bank of India’s DIFC branch raised USD 600 mn from a dual-tranche bond, split evenly between a three-year tranche at a 5.23% coupon and a five-year tranche at 5.416%, Zawya reports. The three-year notes were priced at 93 bps over treasuries and the five-year at 102 bps, tightening 27 bps and 28 bps from initial guidance. The Reg S notes are rated BBB/BBB- by S&P and Fitch, in line with the issuer. Barclays, Citigroup, HSBC, Mashreq, and Standard Chartered were joint global coordinators and bookrunners.

The IFC wants to help Moroccan banks get bad loans off their books. The International Finance Corporation (IFC) is proposing a EUR 60 mn facility to buy non-performing loans (NPLs) and repossessed real estate from Moroccan banks. Under the proposal, the IFC and Germany’s EOS Holding will each commit up to EUR 30 mn. IFC’s board is projected to vote on the proposal — which is part of the IFC’s Distressed Asset Recovery Program — on 15 October.

The move is timely for Morocco. NPL rates (out of the banking sector’s outstanding credit) hit 8.3% in Morocco in early 2026, way above the 5% mark that usually separates stress from health in the banking sector. Morocco is already laying the regulatory groundwork to allow banks to sell distressed debt. The finance ministry published a draft law regulating NPL sales last March, but the law is still in the works.

Nasdaq-listed, Dubai-based mobility startup Swvl Holdings has entered into a definitive agreement for a USD 13 mn private placement priced at the market under Nasdaq rules, according to a press release. The round is led by Coefficient LP, a Houston-based investment firm backed by Egypt's Sawiris family, which is putting in USD 10 mn and will become Swvl's largest institutional shareholder upon closing. An existing shareholder is contributing the remaining USD 3 mn.

Swvl will issue just under 9 mn Class A shares at USD 1.446 apiece, with the investment expected to close tomorrow. Coefficient Founder and Managing Partner Abdalla Ali will join Swvl's board as part of the agreement. Proceeds are earmarked for accelerating Swvl's US expansion, launching a new lending offering for transport operators and partners, and strengthening the company's balance sheet.

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Dubai-based fintech Fasset joined the unicorn club after raising USD 68 mn in series C funding, pushing its valuation to USD 1 bn as it expands its stablecoin-based financial network and AI capabilities, the company said in a post on Facebook. The round was led by Japan’s SBI Group and follows a USD 51 mn Series B in May, bringing its total funding raised this year to USD 119 mn, Khaleej Times reports.

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