As credit growth accelerates and liquidity pressures mount, GCC banks are on track to set a new record in dollar-denominated debt issuance, with issuance expected to exceed $60 billion by the end of 2025, according to a recent report by Fitch Ratings.

Gulf banks are on track to set a new record in dollar-denominated debt issuance, according to a recent report by Fitch Ratings.

GCC banks near record debt issuance

<According to the report, GCC banks have raised $55 billion in debt instruments year-to-date, equivalent to about 30% of total dollar-denominated emerging market bank debt issuance. This is a significant jump from the $36 billion raised in all of 2024, and half of these issuances are Islamic sukuk, reflecting continued strong demand for Shariah-compliant instruments.

Gulf banks have raised $55 billion in debt instruments year-to-date, equivalent to about 30% of total emerging market bank debt issuance denominated in dollars.

Saudi banks lead

Saudi banks came out on top with a total issuance of $28.3 billion since the beginning of 2025, far ahead of their counterparts in the UAE, whose issuance amounted to only $11 billion, followed by Qatari and Kuwaiti banks.

This expansion in Saudi issuances comes against the backdrop of liquidity challenges faced by banks in the Kingdom, where the loan-to-deposit ratio exceeded 100%, reflecting a growing gap between deposit growth and accelerated lending activity.

Interest Rates

<In anticipation of a potential interest rate cut by the US Federal Reserve, Saudi banks have rushed to secure funding through long-term debt instruments. <Among the most notable issuances, Al Rajhi Bank raised $2.5 billion through two sukuk offerings, while Banque Saudi Fransi raised $2.4 billion, in which Prince Alwaleed bin Talal holds a majority stake through Kingdom Holding. <Fitch expects issuance momentum to continue through 2026, supported by several factors, including a potential additional US interest rate cut, $36 billion of debt maturities in the region, and continued tight domestic liquidity, particularly in Saudi Arabia and the UAE. Although Saudi banks" net foreign liabilities are set to remain above 3% of sector assets, which could put pressure on creditworthiness, the agency notes that the sector's reliance on external financing remains limited at just 11.4% of total liabilities in the first eight months of this year."

In a move aimed at boosting Saudi Arabia's credit rating, the agency said the sector's reliance on external financing remains limited at just 11.4% of total liabilities in the first eight months of this year. In a move to diversify domestic funding sources, the Kingdom recently launched its first mortgage securitization market, with the Saudi Real Estate Refinance Company executing the first transaction of its kind, allowing banks to convert housing finance into saleable securities, opening the way for more lending and stimulating economic growth.

These moves come as part of the Kingdom's efforts to diversify its domestic funding sources. These moves come at a critical time for Gulf banks, which find themselves required to secure the necessary liquidity to absorb credit growth and keep pace with changes in the global monetary policy environment.

These moves come at a critical time for Gulf banks, which find themselves required to secure the necessary liquidity to absorb credit growth and keep pace with changes in the global monetary policy environment.