According to a new report by Fitch Ratings, the GCC debt capital market (DCM) is poised for $1 trillion by the end of next year. The DCM in the region had grown 7% year-on-year to $940 billion outstanding at the end of the first quarter of 2024. Saudi Arabia and the UAE emerged as the market leaders, collectively accounting for 73% of the total.

Sukuk, or Islamic bonds, constitute a significant portion of the market, representing 40% of outstanding debt.

Government issuances are expected to remain a key driver, fueled by projected declines in oil prices and interest rates and ongoing efforts to diversify funding sources. 

While Saudi Arabia and the UAE are anticipated to maintain a steady issuance pace, Qatar and Oman are expected to reduce borrowing as they focus on debt repayment.

Kuwait’s DCM development is hampered by the absence of a debt law, limiting its funding options, according to Fitch. Bahrain, facing substantial deficits, remains heavily reliant on the DCM and support from GCC countries.

Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings, emphasized the GCC’s growing prominence in the global debt market, noting that the region now accounts for nearly a third of total emerging market dollar issuance.