Kuwait's $11.25bn bond issuance elicits solid global investor interest

08/10/2025 04:43 AST

Economists have attributed the overwhelming global investor response to Kuwait's first sovereign bond issuance in eight years, valued at $11.25 billion, to five key factors, including the country's exceptional financial solvency, strong credit ratings, and recent structural reforms, notably the Financing and Liquidity Law, which provides the legal framework for the issuance. Speaking to KUNA on Tuesday, economists emphasized that the sovereign bond offering was not merely a measure to finance the budget deficit, but also a political signal demonstrating Kuwait's commitment to strengthening its financing tools under the new Public Debt Law. The issuance drew global demand exceeding $28 billion, with a coverage rate of 2.5 times, highlighting international confidence in the country.

Key factors driving investor interest
Secretary General of the Kuwait Economic Society, Mohammad Al-Jouan, explained that five main factors underpinned the strong investor turnout. These include: Exceptional financial solvency - Kuwait maintains one of the strongest financial positions in the region, with substantial reserves managed by the Kuwait Investment Authority and the Generations Fund, alongside a low public debt-to-GDP ratio of under 10 percent prior to the issuance.

Absence of prior issuances - The last sovereign bond issuance in Kuwait was in 2017, creating a scarcity of Kuwaiti assets in global markets. Strong credit ratings - Fitch, Standard & Poor's, and Moody's maintain Kuwait's ratings at A and AA with stable outlooks, signaling low credit risk relative to regional peers. Attractive pricing - Bonds were priced at a modest spread of 40-50 basis points over US Treasury bonds, offering a compelling combination of low risk and competitive returns. Political signaling and investor diversification - Beyond financing, the issuance conveys a strategic message to markets, while 66 percent of allocations went to international investors across America, Europe, and Asia.

Economic benefits and impact
Professor of Administration and Public Finance at Kuwait University, Dr Yousef Al-Mutairi, highlighted that the issuance helps finance the budget deficit while easing pressure on the General Reserve Fund, allowing its resources to be invested in higher-return global assets. He noted that bond financing is more controllable than direct withdrawals from reserves and coincided with interest rate cuts globally, reducing debt servicing costs. The issuance also helps curb inflation by absorbing excess liquidity, enhancing the purchasing power of the Kuwaiti dinar and stimulating economic activity. Financial expert Dr Fouad Al-Omar, former Vice President of the Islamic Development Bank, stressed that sovereign bonds provide a vehicle for financing key development projects while engaging international banks and investors, strengthening Kuwait's financial sector and supporting the New Kuwait 2035 vision.

Issuance details and response
In early October, the Ministry of Finance issued $11.25 billion in three tranches: $3.25 billion maturing in three years, $3 billion in five years, and $5 billion in ten years. Acting Minister of Finance Dr Subaih Al-Mukhaizeem noted that the high demand and competitive pricing reaffirm Kuwait's standing as a distinguished sovereign issuer, enhancing its position in global markets and strengthening partnerships with international investors.

The issuance was conducted under the Financing and Liquidity Law (No. 60 of 2025), part of a broader structural reform agenda, which also includes the Multinational Entities Tax Law (Decree 157 of 2024) and the Real Estate Development Law, aimed at promoting private sector involvement in housing and advancing other economic initiatives. Kuwait's successful return to international debt markets demonstrates investor confidence in its financial stability, strategic reforms, and long-term economic vision.

KUNA