GCC Banks’ Debt Issuance Set to Cross $60 Billion in 2025

Gulf Cooperation Council (GCC) banks are set to exceed $60 billion of USD debt issuance in 2025, and $40 billion excluding certificates of deposit (CDs), surpassing the record levels of 2024, global ratings agency Fitch Ratings said.

In its latest research, Fitch Ratings said that this is driven by heightened maturities, strong credit growth and favourable financing conditions.

“We expect continued strong issuance in 2026, supported by further US Fed rate cuts later this week, $36 billion of debt maturities, additional strong credit growth in Saudi Arabia and the UAE, and persistent tight domestic liquidity conditions in Saudi Arabia,” it said.

Issuance this year is already almost $55 billion, well above the 2024 total ($36 billion) and 2025 maturities ($23 billion). Excluding CDs, issuance is $36 billion, surpassing Fitch Rating’s expectations at the start of the year.

Most issuance has been from Saudi banks ($28.3 billion), followed by the UAE banks ($11 billion), Qatari banks ($8 billion) and Kuwaiti banks ($7 billion). Sukuk represents nearly half of new issuance, excluding CDs. GCC banks have accounted for almost 30% of USD issuance by emerging-market banks this year, and more than 60% when excluding Chinese banks, the research said.

Subordinated Debt Issuance

Subordinated debt issuance by GCC banks this year has already reached $14.5 billion as against $7 billion in 2024, accounting for almost 40% of issuance, excluding CDs (2024: 22%). This is driven by Saudi banks ($11.2 billion) issuing to support financing growth linked to Vision 2030 projects and in anticipation of tighter capital regulation.

Saudi banks have tapped the USD Tier 2 debt market for the first time since 2020, and account for most of the $6 billion of such debt already issued this year by GCC banks versus $1.5 billion in 2024, the report said.

“This is mainly to diversify their non-common equity Tier 1 capital away from additional Tier 1 (AT1), which is still dominant given the modest spread differential between AT1 and Tier 2 debt in the GCC,” it added.

The UAE and Qatari banks have focused on senior unsecured debt issuance due to refinancing needs and to diversify their funding bases, especially through ESG bonds and sukuk. They have also been active in the Taiwanese Formosa market through floating-rate notes, with the UAE banks raising about $3.5 billion and Qatari banks about $1 billion.

Fitch Ratings expect the UAE bank issuance to remain driven by refinancing and diversification as the sector has good liquidity and a solid net foreign asset position.

GCC banks’ issuance of short-term CDs from large financial hubs, including New York, London, Hong Kong and Singapore, has skyrocketed to $18 billion so far in 2025 as against $3 billion last year. Almost 70% of this was by Saudi banks, reflecting cheaper funding than is available domestically in Saudi Arabia.

“GCC banks also have a record $10 billion of USD AT1 instruments with first call dates in 2026, and we expect most to be called due to high reset spreads and favourable market conditions. AT1 issuance is already USD8.45 billion this year (2024 total: USD5.6 billion), the highest ever, driven by Saudi banks, and is likely to continue apace due to pricing and capital benefit,” Fitch Ratings said.

The agency also said that liquidity will remain a key credit challenge for Saudi banks in 2026, and it expect the sector’s reliance on external funding to continue increasing. The net foreign liability position is likely to stay above 3% of sector assets, which could be credit negative for Saudi banks.