GCC debt issuance fell in 3Q as the market narrowed to fewer, bigger deals from its strongest borrowers

The GCC’s primary debt market raised less last quarter than a year earlier, and did it through far fewer, far larger issuances. Gulf issuers sold USD 34.8 bn of bonds and sukuk in 3Q, down 13.5% from a year earlier, while the number of transactions fell much harder, to 45 from 136, a 66.9% drop, according to Markaz’s GCC Fixed Income report (pdf). The average transaction, however, more than doubled, to USD 773 mn from about USD 296 mn over the same period.

Markaz reads it as a more selective funding market, one where established borrowers could still land large benchmark deals despite the regional geopolitical climate, while smaller and more frequent issuance thinned out.

Underneath the totals, the market shifted from companies to governments. Sovereign issuance rose 39.7% y-o-y to USD 18.15 bn and took 52.2% of the market, up from 32.3% in 3Q 2025, while corporate supply fell 38.8% y-o-y to USD 16.64 bn. Financial institutions — usually the backbone of corporate supply — cut issuance by 49%, though they stayed the largest non-government source at USD 10.84 bn. Between them, governments and financials accounted for 83.4% of the quarter’s value and 38 of its 45 issuances.

The pricing backdrop turned against borrowers: Secondary-market prices fell through the quarter, with the Bloomberg GCC Aggregate index down 4.01% and the S&P MENA Bond & Sukuk index down 4.22%, and five-year sovereign CDS spreads widened across every GCC market except Dubai, by as much as 39.6% for Qatar and 31.2% for Bahrain over the three months. Rising risk premiums make new issuance costlier and more selective, which is why the transactions that got done clustered among sovereigns, big banks, and investment-grade names, and why smaller or lower-rated borrowers largely stayed out. Saudi Arabia was the one sovereign whose CDS ended the period tighter than it began the year.

Saudi Arabia and Kuwait together made up 70.3% of issuance. Saudi stayed the largest market at USD 15.73 bn and 45.2% of the total, even as its own volume fell 21.5% — a drop of roughly USD 4.3 bn that was the biggest single-country drag, according to a press release. Kuwait was the counterweight, more than doubling to USD 8.73 bn, up 106%, to take second place at 25.1%; its surge owed much to the single largest deal of the quarter, a USD 3 bn Kuwaiti government bond.

Other markets mostly pulled back: The UAE held about flat at USD 5.56 bn, down 2.0%, across 11 issuances, the most of any market after Saudi. Qatar fell 52.9% to USD 3.18 bn through just 3 issuances, Bahrain dropped 47.9% to USD 1.33 bn, and Oman raised a single USD 260 mn issue. The quarter’s biggest corporate trade came out of Saudi Arabia, a USD 2.7 bn perpetual sukuk from Riyad Bank, while the Saudi government priced the largest sukuk at USD 2.8 bn.

Issuers avoided the dated long end: Paper maturing in under 5 years and in 5 to 10 years came in almost even, at USD 13.92 bn (40.0%) and USD 13.26 bn (38.1%), so about 78% of the value matured inside a decade. The 10-to-30-year bucket drew just USD 1.08 bn across two transactions (3.1%), and nothing priced beyond 30 years. The exception to the short bias was perpetual paper, which raised USD 6.53 bn across 12 deals, close to 19% of the quarter, and the largest of those came from banks — Riyad Bank, Arab National Bank, Alinma Bank, and Commercial Bank of Dubai among them — using perpetual structures as regulatory capital they can call and refinance later.

Two more features stood out: Sukuk again edged conventional bonds, at 52.9% of value, and the USD stayed the dominant funding currency at 63.4%, ahead of the SAR at 21.8%. Credit quality was more mixed: investment-grade paper accounted for 57.8% of total issuance and the rated universe was almost entirely investment grade at 97.6%, but the share of issuance carrying no rating at all rose to 40.7% from 34.5% a year earlier, much of it government sukuk and bank perpetuals.

MARKETS THIS MORNING-

Asian markets were in the green earlier today. Japan’s Nikkei was up roughly 1.5% and South Korea’s Kospi was up roughly 3.0%. US equities were broadly in the green at closing

THE CLOSING BELL-

The ADX rose 0.5% yesterday on turnover of AED 866.2 mn. The index is down 1.6% YTD.

In the green: United Arab Bank (+14.6%), Abu Dhabi Commercial Bank (+2.8%), and Fujairah Cement Industries (+2.5%).

In the red: Emirates Ins. Co. (+5.0%), Space42 (+4.9%), and Al Buhaira National Ins. Company (+4.8%).

Over on the DFM, the index fell 0.3% on turnover of AED 478.6 mn. Meanwhile, Nasdaq Dubai remained flat.