Briefing Paper: GCC debt and equity markets
Hitting its potential
How the Gulf capital market is driving regional growth
At the end of January 2025, the GCC’s debt capital market (DCM) crossed a significant milestone. The $1tn outstanding in the Gulf region’s fixed income sector represents a symbolic moment in the Gulf capital market’s evolution.
For many years, the region’s debt and equity markets failed to reach their potential as a source of diverse funding, preventing governments from realising their ambitions to transform their economies. That has changed; international institutional investors are now active participants in the market, and governments and corporates are issuing regularly.
Government-related entities (GREs) are meanwhile undertaking conscious efforts to develop debt and equity markets, underscoring their critical role in GCC sovereigns’ economic diversification programmes. There is an economic calculus at play pushing governments to issue debt and divest stakes in companies; with oil prices in 2025 weakening relative to previous years, state budgets are coming under more intense pressure. Fitch Ratings forecasts Saudi government/debt ratio to rise to 35.3% of GDP by end-2026, up from 29.8% at end-2024. Raising funds on debt and equity markets comes into view as a means of ensuring government finances are insulated from global headwinds emanating from President Trump’s tariff policies.
Lower, and more volatile oil prices, will create additional funding needs on the government side and support the debt capital market (DCM) in general. The GCC remains in a comfort zone between high oil prices – which obviate the need for DCM issuance– and low oil prices, that undermine investor confidence.
