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Fitch cites factors increasing Gulf debt costs
The article explains that the cost of financial issuance in Gulf markets is primarily influenced by rising U.S. interest rates and ongoing geopolitical tensions in the region. These factors have led to increased risk premiums and fluctuations in the pricing of debt instruments, especially in the secondary market. It also indicates that investment-grade Gulf countries such as Saudi Arabia, the UAE, Qatar, and Kuwait have returned to risk levels similar to those before the crisis, though borrowing costs have risen due to higher dollar-linked interest rates. Additionally, Kuwait has recently re-entered the debt markets through bond issuance after enacting a new sukuk law, which provides greater opportunities for Islamic investors and diversification of funding sources. This development could help activate the Kuwaiti market and increase its attractiveness to investors. Regarding numbers, the article states that the size of Kuwaiti debt instruments amounts to approximately $50 billion, compared to around $580 billion in Saudi Arabia, with costs expected to continue rising due to higher U.S. interest rates.
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