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Saudi Arabia and the UAE led a wave of regional entities that moved quickly to issue bonds and sukuk as soon as the year began, aiming to raise funds before markets could price in future volatility.
Issuance from the Middle East and Turkey reached over $31 billion in the first two weeks of January, reflecting one of the strongest starts to a year, with signs there’s much more to come.
As in the past few years, Saudi Arabia was among the first out of the gates, raising $11.5 billion through a US dollar–denominated multi-tranche transaction. The kingdom has set an annual borrowing target of $57.8 billion for 2026, and it is expected that up to 30% will be tapped from international markets.
Turkey also issued $3.5 billion via dual-tranche US dollar bonds. Its international borrowing target for 2026 is $13 billion, the same as last year.
The UAE, unlike Saudi Arabia and Turkey, does not publish an annual funding programme in advance; issuance decisions tend to be driven by market conditions and funding needs.
“The best way to gauge potential activity is by looking at upcoming maturities and budgetary needs,” said Karim Elzein, Head of Middle East, Turkey & Africa DCM at Societe Generale Corporate & Investment Banking. “For example, Abu Dhabi has around $2.5 billion that’s maturing in May, and Sharjah has around $1 billion maturing in April. That would be a driver for refinancing.”
Current market conditions make it especially attractive, with spreads at their tightest levels in years and all-in funding costs still compelling, said Elzein.
“Based on what’s been communicated, issuance this year could increase by about 25% compared to last year,” said Elzein. According to LSEG data, total issuance from the region in 2025 reached approximately $172 billion.
Not just about Iran
At the same time, issuers face a range of global risks—geopolitical tensions, the US election cycle and broad macro uncertainty. Any major shock could cause spreads to widen sharply.
“When you weigh out the risk reward, how much tighter can spreads realistically go versus how much wider they could go? That’s the calculus,” he said.
While regional geopolitics, including Iran, figure greatly among the risk landscape, Elzein stressed that they are not the sole driver.
“It’s more about global uncertainties, such as US political dynamics and potential volatility around major events,” he said. “For example, if there were a major disruption in the Fed’s [US Federal Reserve’s] independence, that could have a bigger impact on rates than regional tensions.”
On Iran specifically, the market sees a trade-off, he said. “A flare-up could trigger a flight to quality, pushing yields lower. But it could also lead to oil supply disruptions, driving oil prices higher.”
Therefore, he noted, issuers are not acting solely because of concerns around Iran; they are responding to a broader risk–reward equation: locking in tight spreads now versus risk paying more later if volatility returns.
Strong supply from FIG
Financial institutions groups (FIGs) were also active in early January. Several Saudi banks tapped the market with regulatory capital instruments: Saudi National Bank issued $1 billion at 6.15%; Al Rajhi Bank sold $1 billion in AT1 social sukuk at 6.15%; Riyad Bank raised $1 billion at 5.805%; and Bank Albilad issued $500 million at 6.375%.
In addition, Kuwait Finance House priced a $1-billion, five-year senior sukuk at 4.563%, while Qatar National Bank sold a $750-million Formosa bond, upsized from the original $650 million. First Abu Dhabi issued a five-year $750 million at 4.299%
Among the quasi-sovereign corporates from Saudi Arabia, Saudi Electricity Company, majority owned by the government, raised a combined $2.4 billion via a triple tranche sukuk, and Saudi PIF-backed Saudi Telecom Company raised $2 billion through a dual-tranche sukuk offering. The government-owned oil and gas producer Energy Development Oman raised $650 million via a 10-year sukuk.
On the corporate side, the UAE’s Al Dhafra PV2 Energy Company raised $870.75 million in green bonds, Aldar Properties issued $1 billion in hybrid notes, and Dubai Aerospace Enterprise Ltd. issued seven-year bonds worth $600 million.
(Reporting by Brinda Darasha; editing by Seban Scaria)
