Qatar and Saudi Arabia helped GCC issue record high sukuk in 2024: Kamco Invest

Higher Islamic debt issuances by Qatar and Saudi Arabia supported the growth in aggregate sukuk in the GCC or Gulf Co-operation Council in 2024, according to Kamco Invest, a regional economic think-tank.

Total sukuk issuances in the GCC stood at a record high of $82.1bn in 2024 against $56.1bn in 2023 whereas non-GCC global sukuk issuances stood at $50.4bn in 2024 compared to $65.1bn in 2023, Kamco said in its latest report.

Within the Middle East and North Africa region, the GCC was the key driver of higher bond issuances in 2024, accounting for more than 73% of the total issuances.

Total bond issuances by GCC countries reached a record high at $103.4bn in 2024, an increase of 71% or $42.9bn.

The UAE witnessed the biggest growth in issuances during the year reaching $49.7bn compared to $31.2bn in 2023, followed by Qatar that recorded a growth of $13.4bn.

The UAE was also the biggest bond issuer in the region followed by Saudi Arabia and Qatar with aggregate issuances of $30.8bn and $16.8bn, respectively.

In terms of type of issuers in the GCC, both government and corporates in the region registered higher year-on-year issuances in 2024.

Total sovereign bond issuances in the GCC stood at $33.3bn in 2024 against $20.2bn in 2023; while the GCC corporates saw issuances of $70.1bn in 2024 compared to $40.3bn in 2023, Kamco said.

Highlighting that the outlook for 2025 remains clouded by a number of factors, most important one being the expected policies of the new incoming government in the US; it said the likely change in policies in the US is forecasted to be inflationary, further adding to US Fed’s worries about fighting sticky inflation.

In terms of GCC fixed income issuances, maturities are elevated in 2025 at $89.8bn and the refinancing of these instruments are expected to account for the bulk of the issuances by corporates and governments in the region this year, it said.

"We are seeing a fund raising spree in the US as treasury yields are trending upwards," the report said.

The recent issuance of $12bn bonds by Saudi Arabia and the $1bn sukuk issuance by Kuwait’s KFH are seen as following similar strategies.

Issuances in 2025 would be further supported by a strong pipeline of projects across the GCC related to the respective diversification goals, according to Kamco.

"We expect fresh issuances to come during the second half of 2025 as more clarity emerges in terms of interest rates and inflation," it said.

A fear that some of the rate cuts may be reversed in 2026 could also trigger higher issuances to lock in lower rates, it said, adding fiscal deficits by some sovereigns in the region, including Saudi Arabia’s forecasted $27bn, is another factor supporting issuances by GCC sovereigns.

"The outlook for sukuk issuances is also positive with GCC expected to dominate the market once again, in line with the last few years," it said.

A rising demand for sukuks as well as sustainable financing is expected to drive growth in global issuances of sukuks and ESG or environmental, social and governance-compliant sukuk instruments, according to Kamco.