Kuwait Investment Company (KIC): $160 Billion in Gulf Bonds and Sukuk Issued in 9 Months

- Kuwait’s total sukuk issuances reach $17.5 billion in the first nine months

- Kuwait, Saudi Arabia, and Qatar priced deals where subscription demand exceeded issuance values

- Strong investor appetite for high-quality Gulf credit instruments

KAMCO Invest reported that bond and sukuk issuances in the Gulf states fell 17.5 percent quarter-on-quarter to $42.5 billion in the third quarter of 2026, aligning closely with global slowdown trends and marking a 19.4 percent decline compared to the same period last year.

The report noted high Gulf issuance levels in July, reaching $18.5 billion, supported by Kuwait’s $6 billion sovereign bond issuance. August 2026 saw a drop to $7.3 billion due to the typical summer seasonal slowdown coinciding with renewed combat operations, before issuances recovered in September to $16.7 billion. Total issuances during the first nine months amounted to approximately $160 billion, up 3.3 percent year-on-year.

The report highlighted that demand for Gulf debt instruments remained strong; Kuwait, Saudi Arabia, and Qatar successfully priced sovereign deals where subscription orders exceeded issuance sizes by two to five times. Qatar also managed to reduce its pricing margin by 30 basis points in its first international bond issuance of the year. Interest rates (coupons) rose in line with global interest rates and the three-month SARIBOR rate, which jumped 70.5 basis points in September. Saudi banks yielded returns ranging from 6.3 percent to 6.5 percent on new additional Tier 1 (AT1) sukuk tranches.

Corporate issuances saw the sharpest decline in the third quarter, falling 25 percent quarter-on-quarter to $23.4 billion, while government issuances dropped 6 percent to $19 billion.

The report noted that sukuk recorded strong demand, with issuance values rising approximately 2.5 times quarter-on-quarter to $18.8 billion, distributed between $6.7 billion in government issuances and $12 billion in corporate issuances. This raised the sukuk share of total issuances in that quarter to 44 percent, compared to 15 percent in the second quarter.

Saudi Arabia topped the list with issuances worth $15.7 billion, all in the form of sukuk, followed by the UAE with $12 billion in issuances, almost entirely from the corporate sector. Kuwait was the only major market to record growth, raising $8.7 billion, bringing the country’s total issuances for the first nine months to $17.5 billion, compared to $6 billion in the same period last year. Issuance values were $4.7 billion in Qatar, $1.0 billion in Bahrain, and $0.3 billion in Oman.

KAMCO Invest’s report on the Gulf high-yield credit and bond index (HY) showed a 3.8 percent decline in the third quarter, bringing the year-to-date total decline to 3.4 percent, while the Gulf short-dated sukuk index fell by a smaller margin of 2.2 percent. Nevertheless, investor appetite for high-quality Gulf credit instruments remained strong; the Option-Adjusted Spread (OAS) index for Gulf dollar-denominated sovereign bonds closed at 88 basis points, increasing by only 10 basis points in September 2026, representing roughly half the level of the Emerging Markets Dollar Aggregate Bond index (EM USD Aggregate) at 170 basis points. The selling movement was driven by interest rate changes rather than creditworthiness concerns.

The “Camco Invest” report noted that corporate issuances were weak in July and August, but rebounded in September 2026, led by prominent banks and large corporations. The rise in local financing costs was clearly evident, as the Saudi interbank rate (SAIBOR) for three months jumped by 70.5 basis points in September 2026, and by 82.1 basis points during the third quarter to reach 5.54 percent.

Saudi banks, including Al Rajhi, National Commercial Bank, Alinma Bank, and the Saudi National Bank, issued a series of additional Tier 1 (AT1) perpetual sukuk with profit rates ranging between 6.3 percent and 6.5 percent. Meanwhile, DP World raised approximately $1.6 billion through two tranches: a €750 million green bond with a six-year maturity and a $750 million conventional bond with a ten-year maturity.

First Abu Dhabi Bank and Mashreq Bank each issued $500 million in five-year bonds.

These trends indicate that strong issuers in the region remain capable of refinancing their obligations and managing their balance sheets, even as interest rates stay at elevated levels for longer.

Regarding credit ratings, Fitch removed Qatar from its “Negative Watch” list and affirmed its rating at AA, but maintained a negative outlook due to ongoing risks to liquefied natural gas (LNG) exports through the Strait of Hormuz.