The Gulf Cooperation Council’s (GCC) debt capital market is set to exceed the USD 1.25 trillion mark in 2026 as project funding and government initiatives fuel a 13.6% expansion, stated Fitch Ratings.
As per the credit ratings agency, the region will transform itself into one of the largest sources of US dollar debt and sukuk issuance among emerging markets, with factors like cross-sector economic diversification, refinancing needs, and funding for deficits becoming the key growth drivers.
The Gulf’s debt capital markets, which stood at USD 1.1 trillion at the end of the third quarter of 2025, have evolved from primarily sovereign funding tools into increasingly sophisticated financing means, serving governments, banks, and corporates alike.
“As diversification agendas accelerate and refinancing cycles intensify, regional issuers have become regular participants in global debt markets, strengthening the GCC’s role in emerging-market capital flows,” the report noted, while predicting that the market will be further supported by forecasted lower oil prices, averaging USD 63 per barrel in 2026 and 2027, apart from anticipated US Federal Reserve rate cuts to 3.25% and 3% in those respective years.
Bashar Al-Natoor, Fitch’s global head of Islamic Finance, highlighted the market’s resilience and the rising dominance of sukuk, as he told the Arab News, “Most GCC issuers continued to maintain strong market access in 2025 and so far in 2026 despite global and regional shocks. Sukuk funding share in the GCC DCM outstanding expanded to over 40%, the highest to date.”
Noting the high credit quality of the region’s Islamic debt, the analyst commented, “About 84% of Fitch-rated GCC sukuk are investment-grade, and 90% of issuers are on Stable Outlooks. While there were no defaults or falling angels, there were rising stars with many Omani sukuk upgraded following the sovereign upgrade.”
In 2025, GCC nations accounted for 35% of all emerging market US dollar debt issuance, excluding China. Growth in US dollar sukuk issuance notably outpaced that of conventional bonds. The region’s total outstanding DCM grew by over 14% year on year to USD 1.1 trillion. The market, however, remains fragmented, with Saudi Arabia and the UAE hosting the most developed ecosystems.
Notably, Kuwait issued USD 11.25 billion in sovereign bonds, its first such issuance in eight years, while Oman’s DCM is expected to grow more conservatively as the country focuses on deleveraging.
“Digitally native notes emerged in Qatar and the UAE,” the report said.
Fitch also identified several risks to the outlook, including exposure to oil-price and interest-rate volatility, geopolitical tensions, and evolving Shariah compliance requirements for sukuk. Despite these headwinds, issuers are increasingly diversifying their funding through private credit, syndicated financing, and certificates of deposit.