Fitch Ratings projects GCC countries will remain leading emerging-market US dollar debt issuers through 2026, driven by expanding debt markets and diversification efforts.

By January 2025, the region’s debt capital market exceeded $1tn across all currencies, a 10% year-on-year rise. US dollar debt issuance from the region expanded by 65.8% in 2024 to $133.4bn, accounting for a quarter of all emerging-market US dollar debt issued, excluding China. Fitch expects GCC banks to issue more than $30bn in US dollar debt in 2025, while corporates are increasingly turning to sukuk and bonds to diversify funding sources.

Saudi Arabia leads GCC debt issuance at 44.8%, with the UAE and Qatar at 29.9% and 12.8%, respectively. Saudi Arabia’s and the UAE’s debt capital markets are set for further growth in 2025, supported by economic diversification and funding needs. Kuwait became the region’s third-largest US dollar debt issuer in 2024, with total issuances reaching $13.6bn, primarily from banks.

Sukuk remains a key funding instrument, representing 40% of GCC debt capital market activity. Issuance grew by 43% in 2024 to $87.5bn, outpacing bonds, which increased by just 1.1%. Over 40% of global sukuk originates from the GCC, with Islamic banks playing a central role as both issuers and investors.

Fitch anticipates lower US Federal Reserve interest rates in 2025, which could lead GCC central banks to follow suit, easing funding conditions. New fund passporting regulations could enhance regional investment flows, while environmental, social and governance (ESG) debt, which reached $50bn outstanding at the end of January 2025, is attracting growing interest from international investors.

Despite this growth, the debt capital market remains concentrated in banks, and local-currency corporate issuance remains limited outside Saudi Arabia. Oil price volatility and evolving sharia compliance requirements present additional risks. However, with deepening financial markets and continued sovereign participation, the GCC is set to play an increasing role in global fixed-income markets.