GCC banks are on course to set another record in US dollar debt issuance this year, with the UAE playing a pivotal role in the region’s expanding capital markets.
According to Fitch Ratings, total issuance is already close to $55 billion in 2025, well above the $36 billion raised last year, and is expected to surpass $60 billion by year-end, or about $40 billion excluding certificates of deposit. This surge reflects large upcoming maturities, robust credit growth, and favourable financing conditions.
Saudi banks have been the most active, raising $28.3 billion so far, while UAE lenders follow with $11 billion. Qatari and Kuwaiti banks issued $8 billion and $7 billion respectively. Excluding certificates of deposit, GCC banks have already tapped the markets for $36 billion, easily outpacing expectations set at the beginning of the year.
The UAE’s debt activity is largely focused on senior unsecured instruments to refinance maturing obligations and diversify funding bases. This includes tapping demand for ESG-linked bonds and sukuk, and exploring the Taiwanese Formosa market via floating-rate notes. UAE banks alone have raised about $3.5 billion through Formosa notes in 2025, underscoring their appetite to broaden investor reach. Analysts expect issuance from the UAE to remain steady, supported by solid liquidity, a healthy net foreign asset position, and continued demand for refinancing.
Subordinated debt issuance across the region has reached $14.5 billion this year, more than double last year’s $7 billion, with Saudi banks accounting for the lion’s share at $11.2 billion. They are tapping Tier 2 debt to fund lending linked to Vision 2030 projects and to strengthen capital buffers. By contrast, UAE and Qatari banks have stayed concentrated in senior debt instruments, reflecting less urgency to shore up capital and greater focus on liability diversification.
The Gulf’s debt capital market is also being reshaped by the rapid growth of sukuk, which now accounts for almost half of new issuance excluding certificates of deposit. GCC countries together represent more than 40 per cent of the global sukuk market outstanding. Fitch data shows about 83.5 per cent of publicly rated US dollar sukuk from the region are investment grade, with nearly 60 per cent in the ‘A’ category. UAE institutions have been instrumental in driving sukuk issuance, especially as they align with the government’s sustainable finance initiatives, including the UAE Central Bank’s new Dirham Monetary Framework and the development of a Sustainable Islamic M-Bills programme.
Certificates of deposit issuance has also skyrocketed, rising to $18 billion so far this year from just $3 billion in 2024. Nearly 70 per cent of this is from Saudi banks, which benefit from cheaper offshore funding compared to tight domestic liquidity conditions. While UAE banks are less reliant on CDs, the instrument remains an important option to manage short-term liquidity.
GCC banks face $36 billion of debt maturities in 2026, with issuance expected to remain strong, supported by anticipated US Federal Reserve rate cuts, continued credit growth in Saudi Arabia and the UAE, and domestic liquidity constraints. For the UAE, lower global interest rates will further support refinancing activity and help banks issue more competitively priced debt to international investors.
Fitch highlights that the GCC accounted for more than 35 per cent of all emerging market dollar issuance in the first quarter of 2025, excluding China, up from about 25 per cent in 2024. Saudi Arabia and the UAE dominate the region’s debt capital markets, together representing nearly three-quarters of all outstanding instruments. The UAE alone accounts for almost 30 per cent of the total GCC debt stock.
Despite the record-breaking momentum, regional issuers remain exposed to macroeconomic risks. Softer oil prices — projected at $65 a barrel in 2025 and 2026 due to Opec+ production cuts and tariff-related volatility — could pressure fiscal balances in some countries, particularly Bahrain and Saudi Arabia. However, the UAE, Qatar, and Kuwait are better cushioned with large sovereign wealth assets.
Financial market experts said with global demand for sukuk and ESG-linked bonds expanding, the UAE’s lenders are well positioned to capture a larger share of international flows. “The result is not just stronger balance sheets for banks but also a deeper, more diversified capital market that enhances the UAE’s standing as a global financial hub.”
