UAE consolidates its role as a regional debt issuance hub

30/12/2025 03:46 AST

The UAE has emerged as the Gulf's most dynamic and resilient fixed income hub, steadily consolidating its position through another year of strong issuance activity in 2025, a report showed.

According to Kamco Invest's GCC Fixed Income Market Update, total issuances from the UAE edged up to $64.9 billion, a modest but meaningful rise from the previous year, underscoring the country's expanding influence in shaping GCC debt market flows. Corporate borrowers - especially banks - played an outsized role, driving both issuance volumes and the region's forward-looking maturity profile. With the UAE also leading the GCC in green financing for the year, the Emirates has not only sustained its pipeline but strengthened its strategic identity as a diversified, sophisticated, and increasingly indispensable centre for fixed income activity in the region.

While regional trends reflected a broader shift toward corporate borrowing and a moderation in sovereign supply, the UAE distinguished itself by maintaining growth where others pulled back.

The Gulf's fixed income market closed 2025 on a robust footing, sustaining the momentum of the previous year despite shifting global monetary conditions and a pronounced divergence in government versus corporate borrowing behavior. Emerging market sovereigns drove global issuance to historic highs, and the GCC was no exception - though the drivers of growth evolved meaningfully over the course of the year.

The global backdrop set the tone early. A softer US dollar, easing financing conditions and a surge in thematic debt - particularly AI-linked issuances exceeding $200 billion in the US - reflected a world increasingly reliant on debt markets for strategic investments. Against this backdrop, GCC issuers kept pace: 2025 global fixed income issuance reached $9.5 trillion in the first nine months alone, up 12 per cent year-on-year, according to LSEG data embedded in the report. High-yield activity climbed 20 per cent over the same period, while investment-grade issuance rose 8 per cent, underscoring a broad-based appetite for credit.

Cooling inflation, diverging rate policies
For GCC economies - largely pegged to the US dollar - 2025 was shaped by global inflation trends. US CPI eased to 2.7 per cent in November, the UK retreated to 3.2 per cent, and the Eurozone reached 2.1 per cent, stroking hopes of a "soft landing." In contrast, China hovered near deflation for most of the year before rebounding to 0.7 per cent.

Amid this backdrop, rate paths diverged globally: the US Federal Reserve executed its third rate cut, lowering its target range to 3.50-3.75 per cent. The Bank of England followed with a narrow-vote 25-bp cut, while the ECB paused and Japan raised rates. GCC central banks largely mirrored the Fed, with the exception of Kuwait - which cut a total of 50 bps compared with 75 bps elsewhere in the region due to its currency basket peg.

These dynamics contributed to comparatively stable borrowing conditions in the Gulf, supporting the region's deepening appetite for both sovereign and corporate issuances.

Issuance levels hold firm
The GCC's primary market issuance in 2025 totalled $206.6 billion, nearly identical to 2024's $206.8 billion. However, the composition shifted dramatically. Government issuances fell sharply to $77.9 billion, down from 2024's $98.6 billion. Corporate issuances hit a new record, climbing to $128.6 billion, up from $108.2 billion. Bonds dominated - GCC bond issuance reached a historic high of $125.2 billion, while sukuk issuance fell 19.1 per cent to $81.4 billion.

The UAE maintained its position as one of the region's most active fixed income players. Total issuances reached $64.9 billion, up from $63.4 billion in 2024. Corporate entities drove UAE activity, aligning with a broader regional shift toward private-sector funding. UAE banks accounted for the largest corporate maturities in the GCC over the next five years - $80.9 billion, surpassing their Qatari counterparts.

Green financing also saw the UAE leading the region, with $5.6 billion in green bond and sukuk issuances - a significant rise from $3.8 billion in 2024.

Saudi Arabia remained the largest GCC issuer at $82.0 billion, though this reflected an 18.3 per cent drop from last year's $100.3 billion. Qatar followed a similar downward trajectory with a 21.7 per cent fall to $22.1 billion. In contrast, Kuwait posted the strongest growth, ballooning to $20.5 billion from $2.6 billion, owing largely to the enactment of its long-awaited debt law.

Perpetuals and green instruments rebound
Perpetual debt saw a resurgence. Total perpetual issuances hit $17.9 billion, up from 2024's $10.7 billion. Saudi Arabia dominated, issuing $10.6 billion, while UAE issuers contributed $3.3 billion, reinforcing the Emirates' role in capital-raising diversity.

Green debt also recovered sharply to $12.5 billion, albeit below 2023's peak. The UAE and Saudi Arabia together accounted for over 86 per cent of 2025's green issuance activity.

Maturities build pressure
The GCC faces $508 billion in combined sovereign and corporate maturities between 2026 and 2030, according to Bloomberg data cited in the report.

UAE maturities total $171.8 billion, with corporates contributing $136.2 billion - the highest corporate share in the region.

Saudi Arabia remains the single largest actor with $174.5 billion in upcoming maturities.

Banks and financial institutions dominate corporate maturity profiles, accounting for nearly 80 per cent of all corporate maturities.

The UAE's financial sector alone represents 21.5 per cent of all GCC maturities through 2030, underscoring the centrality of Emirati institutions to regional credit markets.

2026 outlook
Looking ahead to 2026, expectations for monetary policy are shaping the outlook for the GCC's fixed income landscape. While the US Federal Reserve's own projections point to just one rate cut next year, market participants appear more optimistic, pricing in the possibility of at least two. This divergence comes as global inflation is forecast to ease further, with Bloomberg projecting an average rate of 2.8 per cent in 2026.

For the GCC, where most currencies are pegged to the US dollar, the region's central banks are widely expected to follow the Fed's lead. A coordinated round of 50-basis-point cuts is anticipated across most markets, helping maintain monetary stability while supporting the region's substantial project pipelines. Against this environment, governments are likely to return more actively to the debt markets, particularly Saudi Arabia and Kuwait, which face widening fiscal deficits. Meanwhile, corporate issuance is expected to stay elevated - especially in the UAE and Qatar - as refinancing needs rise and issuers take advantage of more favorable borrowing conditions. With an estimated $85.4 billion in maturities due in 2026 alone, the coming year is poised to be shaped by both refinancing demand and fresh borrowing to fund strategic national objectives.

Khaleej Times