RIYADH: Although borrowing costs are still high, investment-grade GCC bond and sukuk spreads in the Gulf Cooperation Council have returned to levels observed prior to the US-Iran confrontation as lowering geopolitical tensions lowered risk premiums, according to Fitch Ratings.
On June 15, the yield difference between the S&P GCC Sukuk Index and the S&P US Treasury Bond Index shrank to 67 basis points from about 100 basis points on March 23 and nearly reached its pre-conflict level of 70 basis points on February 27. Additionally, the spread on the S&P GCC Bond Index narrowed, dropping to 89 basis points from about 100 basis points before to the conflict and 126 basis points in March.
Spreads have improved as the Gulf debt markets continue to witness high issuance activity. According to the Kuwait Financial Center, also known as Markaz, GCC bond and sukuk issuances totaled $55.04 billion in the first quarter of 2026, up 5.64 percent from the same period last year.
According to Fitch, “the future yield trajectory of GCC fixed income remains uncertain.” “If signed and put into effect, the reported US-Iran deal would lessen the more serious geopolitical, credit, and market risks associated with the conflict.
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