RIYADH: According to Fitch Ratings, Saudi Arabia owns the biggest portion of the debt capital market in the Gulf Cooperation Council, accounting for 44.8% of all outstanding issuances. According to the US-based organisation, the GCC’s total DCM hit the $1 trillion mark at the end of January, representing a ten percent annual increase in all currencies. With the highest sukuk and bond issuance rates, Saudi Arabia and the United Arab Emirates have the most developed financial systems.
As Saudi corporations and financial institutions increasingly look to international debt markets to diversify their funding sources, Fitch anticipates that the Kingdom will play a key role in driving the issuance of US dollar debt and sukuk in 2025 and 2026. Banks alone are expected to issue over $30 billion in US dollar-denominated debt this year. Fitch predicted earlier this month that Saudi Arabia’s debt capital market will reach $500 billion by the end of 2025, driven by Vision 2030’s efforts to diversify the country’s economy.
A crucial tool for obtaining long-term funding for governments and corporations alike is the DCM, which entails the trading of securities such as bonds and promissory notes. “Falling oil prices could lead to further DCM growth as lower government revenues could lead to increased borrowing,” according to Fitch Ratings’ most recent assessment. It further stated that a more favourable financial environment is anticipated as a result of the US Federal Reserve’s projected 2025 interest rate drop, with GCC central banks probably following suit.
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