Fitch Ratings reports that continued instability from the Iran conflict is pushing Gulf banks toward private placements and syndicated loans, as market volatility restricts access to public debt. This year, private placements—primarily in senior debt—have already surpassed $4.3 billion. While credit spreads fluctuated at the onset of the conflict, senior and Tier 2 spreads have since seen only modest increases, while AT1 spreads have actually tightened.
Issuance trends vary across the region; Saudi banks are likely to reduce dollar bond activity due to decelerating loan growth, whereas UAE lenders may increase supply to manage approximately $4.4 billion in maturing debt. Despite the geopolitical tension, GCC banks raised $17.5 billion in the first four months of 2026—a 20% year-on-year increase—fueled by a highly active start to the year.
Investor confidence remains notable. Emirates NBD recently saw its AT1 bond sale oversubscribed three times, and Saudi’s Al Rajhi Bank successfully upsized a Tier 2 sukuk private placement to $750 million. Additionally, with $10 billion in AT1 debt facing call dates in 2026, Fitch views extension risk as minimal due to healthy capital ratios and the reputational importance of meeting these calls. However, overall 2026 issuance is expected to remain below the record levels of 2025 as credit growth cools and spreads widen.
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