
GCC Debt Capital Market (DCM) Sees Robust Growth in 2024
by admin | Aug 1, 2024 | Market Trends
The GCC region’s Debt Capital Market (DCM) grew by 7% year-on-year, reaching $940 billion in outstanding debt by the end of Q1 2024. Saudi Arabia and the UAE are major contributors, holding 43% and 30% of the total DCM, respectively.
Significant Growth and Sukuk Dominance
Fitch Ratings, covering over 70% of GCC US dollar sukuk, reported that sukuk made up 40% of the DCM debt by the end of Q1 2024. In comparison, the remaining debt consisted of bonds. Furthermore, Fitch predicts that government debt issuances will likely increase due to expected lower oil prices, reduced interest rates, and ongoing efforts to develop and diversify DCMs.
“GCC countries have made significant progress in developing their DCMs. They now account for nearly a third of total emerging-market dollar issuances, excluding China,” said Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings.
Divergent Trends Among GCC Nations
Saudi Arabia is actively expanding its DCM to address budget deficits. The country uses market issuances to stabilize finances. Meanwhile, the UAE is likely to continue issuing debt, despite having budget surpluses.
On the other hand, Qatar and Oman are contracting their DCMs as they prepare for major debt repayments in 2024. Additionally, Kuwait faces limitations due to the absence of a debt law. Similarly, Bahrain depends heavily on DCM access and GCC funding to manage its large deficits.
Future Outlook
Looking ahead, the GCC’s debt market is poised for further evolution. Regional fiscal policies and broader economic conditions will shape this development. Consequently, the DCM will remain crucial in shaping the financial landscape and supporting sustainable growth.
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