Saudi Arabia emerged as the top issuer in the Gulf Cooperation Council (GCC) bond market during the first half of 2024, raising $37 billion through 44 issuances, according to recent data. This figure marks a 12.5 percent increase from the same period last year, representing 49 percent of the total new supply of GCC bonds and sukuk.
Surge in GCC primary issuances
A new report by the Kuwait Financial Center (Markaz) showed that the overall value of GCC primary issuances reached $75.5 billion during this period, up 38 percent from $54.8 billion in the first half of 2023, with the number of issuances rising to 173 from 130. This surge in issuance activity can be attributed to Saudi Arabia’s ambitious Vision 2030 plan, which includes several megaprojects that require substantial funding. While Saudi banks have traditionally relied on deposit growth as their primary funding source, the scale of these projects exceeds their liquidity capabilities. Consequently, these banks are expected to seek additional deposits and access the international debt market to meet their financing needs. Additionally, these projects receive significant support from the central government and related entities, such as the Public Investment Fund, which has announced plans to deploy $70 billion annually after 2025 and is considering its own fundraising initiatives.
Markaz released its Fixed Income Report, stating that Primary debt issuances of Bonds and Sukuk in the GCC amounted to USD 75.5 billion during H1 2024 compared to USD 54.8 billion raised in H1 2023, representing a 38% increase.
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Growth propelled by UAE and Saudi issuers
The UAE followed Saudi Arabia in terms of issuance value, raising $20.6 billion through 65 issuances during the first half of 2024, compared to $15.4 billion from 58 issuances during the same period last year. This represented 27 percent of the total value of primary GCC bonds and sukuk issuances. Qatari entities were the third-largest issuers within the GCC, with $10.5 billion, marking a 416 percent increase from the same period last year. Bahraini institutions raised $3 billion through 4 issuances, capturing 4 percent of the market, while Omani entities secured $1.7 billion, representing 2 percent of the total. Kuwaiti issuers raised $2.6 billion through 15 offerings, a 791 percent increase from $300 million in the same period last year, also representing 4 percent of the market.
Decline in rated bonds but majority remain investment grade
According to the report, 75 percent of GCC conventional and sukuk bond offerings in the first half of 2024 were rated by major credit rating agencies, including S&P, Moody’s, Fitch, and Capital Intelligence. This is a decrease from 85 percent in the same period the previous year. Of these rated issuances, 71 percent were classified as investment grade, highlighting a strong focus on high-quality debt despite the overall decline in the proportion of rated bonds.
Sectoral breakdown of GCC issuances
The government sector led primary debt offerings by value in the first six months of 2024, raising $41.5 billion, or 55 percent of the total GCC issuances. This was followed by the financial segment, including quasi-government entities, which raised $28.8 billion, or 38 percent of the total offerings. The utilities sector came next, raising $2.9 billion through five issuances, representing 4 percent of the market.
Shift toward sovereign debt issuance
The Markaz bonds report highlighted a notable shift toward sovereign debt issuance in the GCC for 2024. Total primary sovereign issuances surged 77 percent to $41.5 billion in the first half of the year, compared to $23.4 billion in the same period of 2023. Saudi Arabia led this increase with a $5 billion sukuk issuance, marking the largest sovereign issuance in the GCC.
Read more: Saudi Arabia closes March issuance of sukuk program at $1.17 billion
Growth in corporate debt issuance
Corporate debt issuance in the GCC also saw growth, rising 8 percent to $34 billion in the first half of 2024, up from $31.4 billion the previous year.
Sukuk and conventional bond issuances
In the first six months of 2024, Saudi Arabia led the regional sukuk market with a $5 billion issuance, significantly contributing to the overall rise in sukuk across the GCC. Sukuk volumes increased 14 percent compared to the same period in 2023, totaling $26.6 billion through 31 issuances. In contrast, conventional bond issuances surged to $48.8 billion, marking a 56 percent rise from the first half of 2023.
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