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The Gulf Cooperation Council (GCC) banks are likely to issue over $30 billion (Dh110 billion) of US dollar debt in 2025, down 28.5 per cent from $42 billion in 2024, Fitch Ratings said.
GCC banks have about $23 billion of US dollar debt maturing in 2025 with Qatari banks accounting for about a third of the debt while UAE and Saudi banks about a quarter each, said the global ratings agency. Banks in the region have about $2.2 billion in additional Tier 1 (AT1) instruments with first call dates in 2025, and $3.1 billion in 2026.
“This should support issuance as we expect most GCC bank AT1s to be called due to the favourable financing conditions. AT1 issuance jumped to $5 billion in 2024 from $1.7 billion in 2023, the highest since 2021, mainly driven by Saudi banks,” it said.
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Last month, Fitch Ratings said it expects GCC countries’ debt capital markets to grow further and will remain among the largest emerging-market dollar debt issuers in 2025 and 2026 – excluding China, and the largest sukuk issuers and investors globally.
After 11 per cent year-on-year growth, the debt capital markets reached a milestone of about $1 trillion outstanding at the end of the first 11 months of last year.
2024 strongest ever
Last year was the strongest ever for the GCC banks in terms of US dollar debt issuances.
GCC banks’ 2024 US dollar debt issuance was well above the previous record of $25.6 billion in 2020, driven by high credit growth in Saudi Arabia, banks diversifying their funding bases with increased issuance of short-term certificates of deposits, and high debt maturities, on the back of strong investor sentiment.
GCC banks accounted for about 18 per cent of US dollar issuance by emerging-market banks in 2024, and 36 per cent excluding Chinese banks.
The global ratings agency expects the US Federal Reserve to cut rates by 100bp in 2025, which should support favourable financing conditions, and GCC credit growth is likely to be strong, particularly in Saudi Arabia and the UAE.
“Financing conditions should improve further as the Fed reduces interest rates, and GCC banks should still benefit from strong investor confidence on the back of still-high oil prices, and generally good regional liquidity. Most GCC banks have strong investment-grade ratings,” it said in its report on the regional bank’s performance.
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Waheed Abbas
Waheed Abbas is Assistant Editor, covering real estate, aviation and other business stories that directly affect the lives of UAE consumers. He frequently reports human interest stories, too.
