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GCC debt issuances have fallen “significantly” since the onset of the Iran conflict, with many deals now on hold due to the growing economic uncertainties and market volatility, Fitch Ratings has said.
The ratings firm also stated this development will impact Emerging Markets (EM) debt issuance trends, as the GCC accounts for nearly 40% of all EM dollar issued so far in 2026, excluding China.
Debt issuances in the region started off with a bang in January, raising a collective $30 billion, with Saudi Arabia leading the charge. The momentum continued in February and early March, with GCC debt capital market (DCM) outstanding reaching $1.2 trillion as of March 9, up 14% year on year, with 63% of issuance denominated in US dollars.
According to Fitch, over the same period, sukuk issuance rose to a record 41% share of GCC DCM volumes, with Saudi Arabia and the UAE making up the majority of GCC DCM outstanding, followed by Qatar, Bahrain, Kuwait and Oman.
About 84% of Fitch-rated sukuk in the GCC were rated investment grade, with 63.2% in the ‘A’ category, 90% of issuers on Stable Outlooks, and no recorded defaults as of end-2025, the ratings agency said.
As the conflict enters its third week, Bashar Al Natoor, Managing Director & Global Head of Islamic Finance at Fitch Ratings, told Zawya that GCC DCM dynamics going forward will depend largely on the width, length, and depth of the conflict
“While yields have widened in both bonds and sukuk since the onset of the war, the widening has been more pronounced among non-investment grade issuers, and MENA sukuk have continued to trade tighter than MENA bonds, reflecting sustained and broader demand.”
According to Fitch, historically, regional DCM issuances have typically rebounded swiftly once tensions eased following previous geopolitical conflicts in the Middle East, adding that “while some yield widening is visible in GCC bonds and sukuk since the war began, there have not been market wide selloffs.”
Despite heightened geopolitical challenges in recent years, GCC issuer activity has rebounded quickly once tensions eased, with market access broadly maintained for many issuers.
However, Fitch warned that the duration and scale of the conflict in the Middle East have already surpassed the 2025 Twelve-Day War, testing new levels of market uncertainty.
(Writing by Bindu Rai, editing by Seban Scaria)
