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GCC debt capital market (DCM) issuances are steadily reaching $1 trillion outstanding, but remain fragmented, Fitch Ratings said in a new report.
Although DCM will continue to rise through 2024 and 2025, the growth is expected to be slower than Q1 2024.
Government issuances will be driven by anticipated lower oil prices and interest rates, DCM development initiatives and diversification of funding channels.
“Most GCC countries have come a long way in developing their DCMs, with the bloc now accounting for almost a third of total emerging-market dollar issuance, excluding China,” said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings.
However, the DCMs are in different stages of maturity, and less established than more developed regions, he added.
The GCC DCM rose 7% year-on-year (YoY) to $940 billion outstanding at end-Q1 2024, with the largest shares in Saudi Arabia (43%) and the UAE (30%).
At the end of the first quarter, nearly 40% of DCM outstanding in the GCC was sukuk, with the remainder in bonds.
Fitch expects Saudi Arabia to deepen its DCM, with issuance driven by budget deficits.
The UAE issuance will continue in spite of surpluses, while Qatar’s and Oman’s DCMs are contracting, it added.
(Editing by Brinda Darasha; brinda.darasha@lseg.com)