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  Damage avoidance frames debt issuance

  22 April 2026

  

   

  It is still early days, but Gulf fixed-income markets appear to have averted the worst of the conflict, with limited selloffs witnessed during the first six weeks of the Iran war.

  This reflects a strong tailwind for GCC debt capital markets (DCM) in 2026, for both conventional and sukuk (Islamic bonds) – even if geopolitical turmoil may upend issuers’ best-laid plans. 

  Issuers started this year on the front foot, with Fitch Ratings recording $1.2bn in outstanding issuance as of 9 March, an increase of 14% in year-on-year terms, almost two-thirds of which is denominated in US dollars. 

  Those issuers were taking a long-lens view of their funding priorities looking forward. Despite that, there is a strong sense that Gulf markets have been hit harder than other emerging markets by the Iran conflict. For example, in the first trading week after the US-Israel attacks on Iran on 28 February, Asian investors were reducing their exposure to Gulf sovereign and corporate paper.

  Pressure on sukuk

  The impact on the sukuk market has been particularly pronounced. According to Fitch Ratings, the global sukuk market experienced a notable slowdown in dollar issuance during March, following strong activity in the first two months of 2026.

  “If you look at the numbers for the first quarter of 2026 overall, the volume of sukuk issuance is slightly up, but the volume of issuance in FX [foreign exchange] is definitely down,” says Mohamed Damak, senior director, financial services at S&P Global Ratings.

  “And the volume of issuance in FX in March was supported by some transactions that were announced before the start of the war.”

  If there is a much more protracted conflict or with a much more severe implication on the economy, there could be a much more severe implication on the overall volume of issuance in the GCC. But the numbers as of the end-March indicate this is still not yet fully visible.

  “The drop in the volume of issuance in FX is just 12% compared with March 2025, and the overall volume of issuance in local currency and foreign currency is still up by 2.3% year-on-year,” says Damak.

  Strong foundations

  Last year proved an active one for Gulf DCM issuance. Overall, GCC countries accounted for 35% of all emerging market dollar debt issuance in 2025 (excluding China). According to Kuwait-based Markaz, primary debt issuances of bonds and sukuk in the GCC amounted to $189.47bn, through 515 issuances, up 28.13% on 2024.

  “Prior to the conflict, GCC DCMs were performing strongly and building clear momentum,” says Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings. “Most GCC issuers maintained robust market access throughout 2025 and into early 2026.”

  Combined GCC issuance in January and February 2026 reached about $73bn, marking a 14.5% increase from the previous year, according to Fitch. “Sovereign and quasi-sovereign issuers remained foundational to the GCC DCM, but corporate and institutional participation was steadily rising, driven by favourable financing conditions,” says Al-Natoor.

  Kingdom equation

  Saudi Arabia made an auspicious start to 2026, raising $11.5bn on international markets in January, in a sale that was three times oversubscribed. 

  Saudi debt issuance forms part of the kingdom’s wider plans for increased borrowing, framed not just to plug a widening fiscal deficit, but also to take on a greater burden of debt repayment. The kingdom’s outstanding central government debt portfolio reached SR1.52tn ($405.15bn) by the end of 2025, about one-third of GDP. 

  The kingdom’s National Debt Management Centre’s long-term plan envisages 45%-60% of borrowing from domestic and international DCM, the latter comprising about $14bn-$20bn. 

  The Public Investment Fund sold $2bn of bonds on the London Stock Exchange in January, an issuance that was more than five times oversubscribed. In 2025, monthly Saudi debt issuance averaged $6.4bn a year, more than double the figure seen two years earlier. 

  Saudi banks’ interest in bonds is driven by a need to support loan activity, with credit outpacing deposits. Issuing bonds will help close a rise in the loan-deposit ratio, which is well above 100%. 

  “You would expect to see probably a lower level of issuance in Saudi Arabia, where the banks were contributing to a significant amount of issuance. They will probably see lower landing growth this year, which could result in lower overall refinancing needs,” says Damak. 

  The UAE is another prominent Gulf issuer that entered 2026 with a robust pipeline of DCM activity in the works. 

  Last year, issuance of $47.71bn absorbed a quarter of all GCC issuance, a 24% increase on 2024. That put it comfortably ahead of Kuwait on $23.7bn, and Qatar on $22.47bn, although one of the fastest increases in DCM issuance last year was from Bahrain, which raised $11.24bn, a 63% increase on the previous year.

  UAE DCM was expected to exceed $350bn this year, notes Fitch Ratings, supported by strong sukuk issuance and the need to diversify funding sources. Dollar sukuk issuance in the UAE last year grew on 21.4% in 2024.

  Ceasefire dependency

  Much will inevitably hinge on the evolution of the Iran conflict. Here, it may pay to take the long-lens view, say analysts. “The liquidity declines observed in the Middle East and North Africa and GCC sukuk are unlikely to be permanent,” says Fitch’s Al-Natoor. 

  “As stability returns and the ceasefire holds, liquidity is expected to gradually recover, although the pace of recovery will be heavily dependent on investor confidence and sentiment.”

  Al-Natoor emphasises that the market itself has not undergone a structural transformation. Instead, some investors have repriced risk and adjusted premiums to reflect heightened geopolitical uncertainty. 

  “This distinction matters, as the underlying fundamentals of GCC credit remain intact, with the majority of issuers holding stable outlooks. Notably, the number of GCC issuers placed on Rating Watch Negative increased during this period, reflecting elevated uncertainty.”

  Rating Watch Negative flags that the rating is under review and could be resolved either by affirmation or downgrade, depending on subsequent developments.

  “Perceptions and risk appetite may take time to recalibrate,” says Al-Natoor. 

  “Despite that, there has been some private placement activity during this period, which hints that investors may be selectively engaging with the market while monitoring developments. 

  “If current stability is sustained, a broader return to public markets could follow.”

  This reinforces the sense that it is the sustainability and longevity of the ceasefire that will be decisive in shaping both the pace and strength of market recovery. 

  Fitch Rating’s base case leans towards gradual recovery in GCC DCM markets, both sukuk and conventional, rather than sustained structural damage. 

  “The fundamentals remain solid, but longer-term effects will ultimately depend on post-war sentiment and market access,” says Al-Natoor. 

  “We continue to see subdued dollar-denominated issuance, although some local currency activity persists.” 

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  James Gavin
• 
  Conflict tests UAE diversification

  22 April 2026

  Commentary
  John Bambridge
  Analysis editor

  The UAE entered 2026 as the region’s strongest economic performer, with GDP forecast at 5% and construction output at a record $59bn. The Iran conflict that began on 28 February did not simply damage assets; it stress-tested the structural assumptions underpinning that performance.

  This occurred across a clear fault line. Sectors with state depth behind them have largely held; sectors built on openness and connectivity have not.

  Banks entered the crisis in the best shape in a decade. Capital adequacy at 17.1% and a loan-to-deposit ratio of 77.7% as of Q4 2025 gave lenders genuine capacity to absorb the shock. Emirates NBD raised $2.25bn in syndicated financing in what it described as the tightest pricing in its history. This was a clear signal that international confidence in the UAE’s financial architecture, if not its near-term growth trajectory, remains intact.

  Abu Dhabi National Oil Company’s capital programmes are also continuing. Gas processing expansion targeting 30% additional output capacity by 2030 is advancing through final investment decisions, even as Habshan – one of the programme’s key sites – sustained damage in the 3 April strikes. Infrastructure investment on a five-year horizon is not managed on six-week threat windows.

  Energy infrastructure took the most visible physical hit. Export routes through the Strait of Hormuz remain constrained, Emirates Global Aluminium’s Al-Taweelah smelter faces up to a year of restoration, and the full damage assessment across Abu Dhabi’s industrial corridor is not yet complete.

  Aviation, tourism and trade logistics absorbed a simultaneous shock. Airline operational capacity dropped dramatically and is still working to find a new equilibrium. Hotel occupancy fell from a reported monthly average of 86% to a weekly average below 23% within a fortnight. Prior to the conflict, Jebel Ali was the most connected container port in the Middle East, and carriers have concentrated transshipment traffic there to mitigate Red Sea disruptions. The closure of Hormuz severed the hub and unmade the logic of the recent traffic consolidation.

  The transit hub paradox is now observable rather than theoretical. Dubai’s competitive advantage rests on connectivity; that connectivity is also its vulnerability. When the Gulf becomes unsafe, Dubai’s own trade does not simply freeze; its hub function collapses.

  What the ceasefire opens is a recovery window, not an immediate reversal of impacts. Traveller confidence, insurer risk pricing and carrier route economics do not normalise with a political announcement. The summer travel season, which begins in May, will provide the first measurable answer to how much of the pre-conflict model is recoverable – and how quickly.

  

   

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  MEED’s May 2026 report on the UAE includes:

  > GVT &: ECONOMY: UAE economy absorbs multi-sector shock
  > BANKING: UAE banks ready to weather the storm
  > ATTACKS: UAE counts energy infrastructure costs
  > UPSTREAM: Adnoc builds long-term oil and gas production potential
  > DOWNSTREAM: Adnoc Gas to rally UAE downstream project spending
  > POWER: Large-scale IPPs drive UAE power market
  > WATER: UAE water investment broadens beyond desalination
  > CONSTRUCTION: War casts shadow over UAE construction boom
  > TRANSPORT: UAE rail momentum grows as trade routes face strain

  To see previous issues of MEED Business Review, please click here

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  John Bambridge
• 
  Firms submit Qiddiya high-speed rail EPC prequalifications

  22 April 2026

  

   

  Register for MEED’s 14-day trial access 

  Saudi Arabia’s Royal Commission for Riyadh City, in collaboration with Qiddiya Investment Company (QIC) and the National Centre for Privatisation & PPP, received bids on 16 April from firms for the engineering, procurement, construction and financing (EPCF) package of the Qiddiya high-speed rail project in Riyadh.

  Firms interested in bidding for the project on a public-private partnership (PPP) basis have been given until 30 April to submit their prequalification statements, as MEED reported earlier this month.

  The prequalification notice was issued on 19 January, and a project briefing session was held on 23 February at Qiddiya Entertainment City.

  The Qiddiya high-speed rail project, also known as Q-Express, will connect King Salman International airport and the King Abdullah Financial District (KAFD) with Qiddiya City. The line will operate at speeds of up to 250 kilometres an hour, reaching Qiddiya in 30 minutes.

  The line is expected to be developed in two phases. The first phase will connect Qiddiya with KAFD and King Khalid International airport.

  The second phase will start from a development known as the North Pole and travel to the New Murabba development, King Salman Park, central Riyadh and Industrial City in the south of the city.

  In November last year, MEED reported that more than 145 local and international companies had expressed interest in developing the project, including 68 contracting companies, 23 design and project management consultants, 16 investment firms, 12 rail operators, 10 rolling stock providers and 16 other services firms.

  In November 2023, MEED reported that French consultant Egis had been appointed as the technical adviser for the project. UK-based consultancy Ernst & Young is acting as the transaction adviser, and Ashurst is the legal adviser.

  Qiddiya is one of Saudi Arabia’s five official gigaprojects and covers a total area of 376 square kilometres (sq km), with 223 sq km of developed land. 

  

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  Yasir Iqbal
• 
  Qatar invites bids for major power grid expansion

  22 April 2026

  Qatar General Electricity & Water Corporation (Kahramaa) has invited bids for a major power transmission expansion project covering substations and extra-high-voltage cables.

  The bid submission deadline is 14 May.

  The engineering, procurement and construction (EPC) contract covers new substations at multiple voltage levels. It also includes the supply and installation of 400kV extra-high-voltage power cables.

  The project is divided into the following packages:

  • Substation packages S1 and S2 cover new 132/11kV substations  
  • Package S3 covers new 66/11kV substations
  • Package S4 includes a new 400/220/132kV substation, along with upgrades and modifications to existing 400kV and 220kV substations
  • Package S5 covers new 132/11kV substations and upgrades to existing 132kV and 66kV substations
  • Cable packages C1 and C2 cover 400kV cables

  The bid bond is set at QR7m ($1.9m) for the full tender, while bids for individual packages require a QR1m ($0.27m) bond per package. 

  Kahramaa stated that foreign companies not registered in Qatar may participate, subject to meeting specified conditions, including registration and certification requirements.

  It added that it may increase or decrease the scope during the contract period in line with Qatar’s Tenders & Auctions Law.

  Kahramaa procurement plan

  Kahramaa’s 2026 procurement plan includes 198 tenders with a total estimated value of QR21.4bn ($5.9bn).

  Electricity transmission projects account for QR8.9bn ($2.4bn) and include the construction of new 400/132kV substations in Al-Wukair and Al-Mashaf, as well as the expansion of 400kV substations at Ras Laffan.

  These also cover the installation of 132kV underground cables between Al-Sailiya and Al-Rayyan over a 24-kilometre route, as well as upgrades to the 400kV and 220kV networks.

  Additionally, there are 64 planned electricity distribution projects managed by the Electricity Distribution Department that cover the medium-voltage and low-voltage networks throughout Doha and the regional municipalities. 

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  Mark Dowdall
• 
  Riyadh awards Expo 2030 infrastructure work

  22 April 2026

  Register for MEED’s 14-day trial access 

  Saudi Arabia’s Expo 2030 Riyadh Company (ERC), tasked with delivering the Expo 2030 Riyadh venue, has awarded two contracts for the next phase of infrastructure works at the site.

  The contracts were awarded to local firm Al-Yamama Company. Their scope covers the construction of road networks and infrastructure for water, sewage, electricity, telecommunications and electric vehicle charging.

  ERC did not disclose the contract values or project timelines.

  The awards follow ERC’s January award of an estimated SR1bn ($267m) contract for initial infrastructure works at the site to local firm Nesma & Partners. That scope covers about 50 kilometres of integrated infrastructure networks, including internal roads and essential utilities such as water, sewage, electrical and communication systems, and electric vehicle charging stations.

  The overall infrastructure works – covering the construction of main utilities and civil works at Expo 2030 Riyadh – is split into three packages:

  • Lot 1 covers the main utilities corridor
  • Lot 2 includes the northern cluster of the nature corridor
  • Lot 3 comprises the southern cluster of the nature corridor 

  The masterplan encompasses an area of 6 square kilometres, making it one of the largest sites designated for a World Expo event. Situated to the north of the Saudi capital, the site will be located near the future King Salman International airport, providing direct access to various landmarks within Riyadh.

  The Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth vehicle, launched ERC, a wholly owned subsidiary, in June last year to build and operate facilities for Expo 2030.

  ---

  MEED’s April 2026 report on Saudi Arabia includes:

  > COMMENT: Risk accelerates Saudi spending shift
  > GVT &: ECONOMY: Riyadh navigates a changed landscape
  > BANKING: Testing times for Saudi banks
  > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
  > DOWNSTREAM: Saudi downstream projects market enters lean period
  > POWER: Wind power gathers pace in Saudi Arabia
  > WATER: Sharakat plan signals next phase of Saudi water expansion
  > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
  > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

  To see previous issues of MEED Business Review, please click here

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  Yasir Iqbal