Q1 2026 saw GCC primary bond and sukuk issuances rise 5.64% year on year to $55.04 billion across 95 deals, driven by Saudi sovereign borrowing and a resurgent UAE. Yield spreads widened sharply late in the quarter as the Iran conflict prompted issuers to pause transactions.
After a 6.1% contraction in Q1 2025, GCC primary issuances rebounded to $55.04 billion, nearly matching the Q1 2024 peak of $55.5 billion. The recovery was broad-based, with five of six GCC members posting volume gains. Total outstanding GCC debt capital market securities now stand at $1.2 trillion, up 14% year on year.
Geographic Breakdown
Saudi Arabia dominated with $32.54 billion across 42 deals (59.1% market share), up 3.1% year on year. The UAE delivered the quarter's sharpest growth, up 33.1% to $13.57 billion across 36 deals, reflecting its maturing corporate debt market and strong Nasdaq Dubai activity. Qatar was the sole underperformer, falling 41.2% to $4.20 billion due to timing.. Bahrain (+37.2%) and Kuwait (+40.7%) posted strong gains from lower bases.
Sector, Instrument & Deal Size
Government entities led by value , 12 issuances raised $20.46 billion (37.2%), up 5.5% year on year. Financials dominated by count (64 of 95 deals) but fell 14% in aggregate value to $19.45 billion, as issuers shifted to smaller, shorter-dated paper. Energy contributed $5.52 billion across 6 deals, largely project-level sukuk from Saudi Arabia and the UAE.
Just 20 deals above $1 billion generated $33.33 billion, 60.6% of total volume, showing GCC sovereigns' preference for large benchmark transactions. USD dominated currency composition at 85% of volume or $46.78 billion across 62 transactions, reflecting the dollar-peg arrangements of most GCC members. Saudi Riyal issuances ranked second at $4.04 billion; 10 SGD-denominated deals worth $897 million signal deepening ties with Asian institutional investors.
Conventional bonds grew faster than sukuk (+6.2% vs +4.6%), driven by the UAE's preference for USD conventional paper. Globally, sukuk outstanding crossed $1.1 trillion at the end of Q1 2026, up 15% year on year. Saudi Arabia accounted for 61% of ESG sukuk activity in Q1, making Islamic instruments the dominant vehicle for sustainability-linked financing in the region.
Geopolitical Headwinds
The outbreak of the Iran conflict in late February 2026 introduced significant market volatility. New issuances fell sharply, with many deals placed on hold. By March 10, the S&P MENA Sukuk Index yield had risen 32 basis points to 4.78%; the conventional bond index widened 28bp to 5.01%. High-yield sukuk spreads moved more sharply, rising 79bp to 6.61%.
The GCC accounts for approximately 40% of all emerging market dollar issuance in 2026, excluding China. A sustained pause in Gulf issuances carries significant implications for EM debt markets globally.
Fitch Ratings
"GCC issuances were strong at the start of 2026, with many entities aiming to benefit from favourable conditions ahead of the typical Ramadan slowdown."
Outlook
The structural pipeline remains strong with $174.5 billion in fixed-income Saudi Arabia bonds projected to mature between 2026 and 2030, closely followed by the UAE at $171.8 billion. Refinancing alone is expected to generate approximately $85.4 billion in new issuances across 2026. Full-year volumes may exceed last year's record as geopolitical conditions stabilise.
