DCM issuances in GCC fall on Iran war: Fitch

New US dollar bond and sukuk issuances from GCC issuers have fallen significantly since the start of the Iran war, after presenting strong credit fundamentals ahead of the outbreak, Fitch Ratings said in a recent report.

Many deals remain on hold due to the economic uncertainties and volatility. This will affect Emerging Markets (EM) debt issuance trends, as the GCC accounts for about 40% of all EM dollar issued so far in 2026 (excluding China).

Historically, regional DCM issuances have typically rebounded swiftly once tensions eased following previous geopolitical conflicts in the Middle East. However, the ultimate effect will depend on the scope and duration of the Iran war. While some yield widening is visible in GCC bonds and sukuk since the war began, there have not been market wide selloffs.

Fitch said the slowdown could affect debt issuance trends in emerging markets, as GCC issuers account for about 40% of total emerging-market dollar issuance in 2026 so far (excluding China).

Regional debt markets have historically rebounded quickly once geopolitical tensions ease, though the ultimate impact will depend on the scope and duration of the conflict. While yields on Gulf bonds and sukuk have widened somewhat since the war began, markets have not seen broad-based selloffs.

Fitch added that GCC issuance was strong at the start of 2026, as many issuers moved to take advantage of favorable conditions ahead of the usual slowdown during Ramadan. The outstanding value of GCC debt markets reached $1.2 trillion as of March 9, 2026, up 14% year-on-year, with 63% of issuance denominated in U.S. dollars.

Sukuk issuance rose to a record 41% share of the GCC debt market, with Saudi Arabia and the UAE accounting for the bulk of outstanding GCC debt, followed by Qatar, Bahrain, Kuwait, and Oman. Sukuk also represented 16% of total emerging-market dollar debt issuance in 2025 (excluding China).

Fitch said local-currency sukuk and bond issuance in the GCC remains largely driven by governments. Funding needs and diversification of financing sources remain key priorities for GCC governments and issuers seeking broader liquidity channels. Many issuers plan their funding well in advance, particularly ahead of large maturities, helping limit immediate refinancing pressures.

Fitch forecasts Brent crude to average $70 per barrel in 2026 and $63 in 2027.

Similar periods in the past benefited from wider yields, particularly during times of heightened geopolitical tensions or Sharia-related uncertainty, noting that current yield movements remain below the peaks seen

in previous periods, Fitch added.