GCC Debt Market Tops $1.1trn As Dollar Issuance Surges – Report

Fitch said the GCC’s debt capital market grew by more than 14 per cent year on year (YoY) in 2025, with US dollar-denominated instruments accounting for around 62 per cent of outstanding debt. The agency expects the market to continue expanding in 2026, surpassing $1.25 trillion, as governments and corporates pursue diversification, refinancing and project funding.

The GCC is forecast to remain one of the largest emerging market issuers of US dollar debt and sukuk next year. Fitch said lower projected oil prices of around $63 per barrel in 2026 and 2027, alongside anticipated US Federal Reserve rate cuts, could further support issuance as funding needs remain elevated.

Saudi Arabia and the UAE continue to dominate the regional market, accounting for 46 per cent and 29 per cent respectively of GCC debt outstanding. They are followed by Qatar with 12 per cent, while Bahrain, Kuwait and Oman each account for around 4 to 5 per cent.

US dollar debt dominates GCC

Total debt issuance across the GCC exceeded $400 billion in 2025, up 3 per cent on the previous year. In emerging markets excluding China, the GCC accounted for 35 per cent of all US dollar debt issued and 81 per cent of US dollar sukuk issuance. Dollar sukuk issuance in the region rose by more than 72 per cent YoY to $70.2 billion, significantly outpacing growth in conventional bonds.

Sukuk now represent a record 41 per cent of total GCC debt outstanding. Fitch said around 84 per cent of Fitch-rated sukuk in the region are investment grade, with more than 63 per cent rated in the ‘A’ category. There were no rating defaults or falling angels in 2025, while several Omani issuers were upgraded following the sovereign’s upgrade to ‘BBB-’.

Environmental, social and governance-linked debt outstanding in the GCC reached $65 billion, with Saudi Arabia and the UAE together accounting for 41 per cent of all emerging market ESG US dollar debt issued in 2025.

Despite strong market access, Fitch cautioned that GCC debt markets remain exposed to oil price volatility, interest rate movements, geopolitical risks and evolving sharia requirements for sukuk. These factors could affect fiscal balances, funding costs and investor sentiment.

The agency also noted increasing use of alternative funding tools, particularly in Saudi Arabia, including private credit, syndicated loans and certificates of deposit. Local currency issuance remained mixed across the region and largely sovereign-led, with limited participation from banks and corporates outside Saudi Arabia.

Fitch said continued government initiatives to deepen local capital markets, alongside regulatory developments such as market-making frameworks and Islamic finance strategies, are likely to support further growth and sophistication across the GCC debt landscape.