MENA bond issuance falls 10% in 9M 2026; sukuk share hits five-year low - LSEG

By Brinda Darasha

Total bond issuance across the Middle East and North Africa (MENA) reached $129.7 billion during the first nine months of 2026, down 10% from the same period a year earlier, while the number of deals declined 26% to 157, according to LSEG data.

The decline in issuance comes amid tough funding conditions across regional debt markets, although sovereigns, banks and corporates continue to tap capital markets to diversify funding sources, and support refinancing and growth plans.

While the regional conflict acted as a catalyst for the decline in both the number of issuances and value, it was not the sole driver, said Andreas Anthis Head of Multi Asset & Absolute Return, Mashreq Capital.

"The decline owes more to the second-order effects it set in motion across investor sentiment, interest rates and credit spreads. First, the war weighed heavily on sentiment. Greater uncertainty over the regional growth outlook made corporate borrowers increasingly reluctant to take on new debt.”

“Second, the war materially raised the cost of borrowing. Higher oil prices lifted inflation expectations and pushed yields higher. The US 10-year Treasury yield rose from 4.58% at the start of 2025 to a cycle high of 5.31% in early October 2026, raising all-in funding costs across the region,” Anthis said.

Over the same period, GCC credit spreads widened by roughly 60 basis points from pre-war levels. Smaller and lower-rated issuers bore the brunt of this repricing, and many deferred planned transactions, he added.

“The market has not closed. It has become more selective, favoring credit quality and penalizing weaker balance sheets.”

Saudi Arabia remained the region's most active debt issuer, accounting for 42% of total bond proceeds raised during the period.

The Government of Saudi Arabia topped the issuer list, raising over $11.4 billion through a four-part international bond sale.

The UAE followed with a 26% share, while Qatar contributed 13% of total issuance.

Financial institutions were the largest issuers, representing 47% of total proceeds raised during the first nine months of the year. Government and agency issuers accounted for 29% of issuance volume.

Sukuk market slowdown

The Islamic debt market saw a sharper slowdown, with sukuk issuance falling 39% year-on-year to $34.8 billion. Sukuk represented 27% of total bond proceeds raised in the region, marking their lowest share of overall issuance in five years.

“Sukuk issuance has been affected by roughly the same drivers as the conventional issuance with one additional factor: execution complexity. Volatile markets created narrower issuance windows, and conventional bonds can generally be structured and executed faster than sukuk,” said Anthis.

In the bond bookrunner rankings, Standard Chartered ranked first during the first nine months of 2026, managing $15.5 billion of issuance proceeds and capturing a 12% market share. The bank also led the regional Islamic bond league table.

JP Morgan followed with $14.4 billion in cumulative proceeds and 11% market share.

Outlook

With no clear resolution to the conflict, the GCC debt market is expected to remain resilient, but increasingly bifurcated, creating a two-tier market.

“Sovereigns, GREs and banks should retain market access, although issuance is likely to remain opportunistic given the US 10-year Treasury yield at 5.12% and still elevated credit spreads,” Anthis said.

“Around $13 billion of GCC bank dollar debt matures in Q4 2026, creating near term refinancing needs. Lower rated borrowers are likely to pay wider new issue concessions or defer issuance into 2027, while renewed conflict escalation remains the key downside risk,” he added.

(Reporting by Brinda Darasha; editing by Seban Scaria)

brinda.darasha@lseg.com