GCC debt capital market activity set to stay strong in 2026: Fitch ratings

Debt capital market (DCM) activity in the GCC is expected to remain robust through 2026, underpinned by a strong issuance pipeline and favorable funding conditions, according to a new report by Fitch Ratings.

Outstanding GCC DCM volumes reached $1.1 trillion in the third quarter of 2025, marking a 12.7% year-on-year increase. Sukuk accounted for more than 40% of total issuances, rising nearly 22% year-on-year, outpacing the 7.2% growth in conventional bonds.

“We expect the GCC debt capital market to remain resilient into 2026, supported by robust issuance, favourable funding conditions, and a high-quality issuer base — over 81% of rated dollar sukuk are investment grade,” said Bashar Al Natoor, Fitch’s global head of Islamic finance. “However, the GCC DCM remains fragmented across its six member countries in terms of maturity, depth, and credit profile, with Saudi Arabia and the UAE the most developed, although all markets saw activity this year.”

Fitch noted that the GCC accounted for 32% of all emerging-market U.S. dollar debt issued in the first nine months of 2025 (excluding China) and is expected to remain among the top emerging-market issuers next year. Continued issuance will be driven by government initiatives to deepen domestic markets, diversify funding sources, finance budget deficits, and address upcoming debt maturities.

Saudi Arabia and the UAE remain the largest DCMs in the region, representing 46% and 30%, respectively, of total outstanding GCC debt. Fitch rates more than 70% of the GCC dollar sukuk market, with 65% of these issuances in the ‘A’ category and nearly 85% on a stable outlook.

While sovereign debt-to-GDP ratios across most GCC economies remain below global peer averages, Bahrain stands as an exception, with Fitch forecasting a ratio of 129% by the end of 2025.

The report also highlighted steady growth in environmental, social, and governance (ESG)-linked instruments. ESG DCM outstanding reached $62.8 billion by the end of the third quarter, with sukuk accounting for nearly half — a 54.1% increase compared with the previous year.