A recent report indicates that fixed income maturities in the GCC are anticipated to stay high over the next five years, supported by pandemic-era issuances designed to bolster economic growth worldwide.
According to Kamco Invest's July update on the GCC Fixed Income Market, primary market activities in GCC bonds and sukuk surpassed expectations, with record issuances in the first half of 2024 totaling $113.7 billion, nearly double the H1-2023 figures. Saudi Arabia led in year-on-year growth, contributing nearly 50% of the increase, followed by the UAE and Qatar.
Bloomberg data reveals that GCC sovereign maturities over the next five years amount to $174.3 billion, with corporate maturities slightly lower at $165.5 billion. The region's bonds and sukuk are expected to maintain high maturities until 2029, before a sharp decline in 2030. The majority of these maturities are in US dollars, with local currency issuances in Saudi riyals and Qatari riyals making up 11.7% and 7.3%, respectively.
The credit rating profile of GCC governments means that most maturities are in high investment grade or A-rated instruments. Junaid Ansari, Kamco's head of investment strategy and research, noted that 40.9% of upcoming maturities are for investment grade instruments, with conventional bonds leading at $224.5 billion, and sukuk at $115.3 billion.
In terms of country distribution, the UAE is projected to face the largest fixed income maturities between 2024 and 2028 at $116.3 billion, followed by Saudi Arabia at $105.3 billion. Qatar and Oman are next with $61.3 billion and $22.4 billion, respectively. The banking and financial services sector dominates sector maturities with $128.6 billion, accounting for 77.7% of total corporate maturities and 37.8% of total GCC maturities until 2028.
Banks in the UAE and Qatar are leading in maturities, with $53.4 billion and $20.4 billion respectively over the next five years. Real estate maturities are concentrated in the UAE and Saudi Arabia at $5.9 billion and $2.4 billion until 2028. Kamco anticipates a record year for GCC issuances, expecting aggregate issuances to exceed $150 billion by year-end, with corporate issuances likely to increase as rate cuts are implemented.
Green bonds continue to attract interest in the GCC, with Qatar's recent issuance and potential follow-ups from other GCC countries. Oman's ministry of finance is also preparing a sustainable finance framework for future borrowing.
