GCC banks are on track to see their largest ever dollar debt issuance in the first quarter of 2024, exceeding the 2020 record of $25.2 billion and the full year for 2023, according to Fitch Ratings.   

According to the global ratings agency, debt issuance has been driven by strong investor sentiment fuelled by high oil prices, and rapid credit growth in Saudi Arabia.

“We expect these drivers to continue, and issuance will also be spurred by about $30 billion of maturities in 2024-2025 and lower US dollar interest rates.”

Year-to-date issuance is $20.1 billion, already surpassing the 2023 total of $15.2 billion with banks in Saudi Arabia and the UAE accounting for 33% and 26% respectively.

This is the first time Saudi Arabian banks have issued more US dollar debt than UAE banks, being increasingly active in international debt capital markets since 2020 to support financing growth plans, diversify their funding bases, and more recently, to offset the high cost of liquidity domestically. Sukuk accounts for 51% of YTD issuance excluding certificates of deposit, reflecting strong investor demand and pricing dynamics, Fitch said.

The Federal Reserve is expected to cut rates by 75 basis points in 2024 and 125 basis points in 2025, an update from the agency said.

(Writing by Imogen Lillywhite; editing by Seban Scaria)