Gulf issuers chase capital as oil prices strain budgets

Several major Gulf institutions, including Saudi Arabia’s $925 billion Public Investment Fund (PIF), are preparing to issue new bonds in the coming weeks, defying recent volatility in global debt markets triggered by U.S. President Donald Trump’s tariff announcements.

According to multiple sources familiar with the matter, Saudi Arabia’s sovereign wealth fund is planning to raise between $1.5 billion and $2 billion through a sukuk (Islamic bond). 

This follows an earlier $11 billion raised by PIF earlier this year as part of its broader funding strategy. The new issuance comes amid increasing pressure on the kingdom to boost borrowing or reduce spending due to falling oil prices, which threaten to significantly dent public revenues.

“In the Middle East, the main concern is oil prices, but both corporates and governments have very strong fundamentals. Reserves are growing, and everything’s doing well,” said Zeina Rizk, co-head of fixed income at Amwal Capital Partners, to Reuters.

Joining the bond wave is Abu Dhabi Ports Company (AD Ports), which is expected to raise $2 billion, while UAE-based renewable energy leader Masdar is planning to issue a $1 billion green bond to support its international clean energy projects. “While we do not comment on market speculation, we have stated our intention to be a repeat issuer of green bonds,” Masdar said in a statement.

Meanwhile, Saudi Arabia's Banque Saudi Fransi (BSF) is expected to launch an above-benchmark bond this week. In March, Saudi National Bank raised $750 million through a dollar-denominated bond issued in Taiwan. Neither PIF nor BSF have commented on the reports.

The surge in Gulf bond activity comes despite recent market headwinds. President Trump’s surprise announcement of sweeping tariffs in early April initially rattled investor confidence, even though most of the measures were later rolled back. While the uncertainty has led to heightened borrowing costs, market analysts remain optimistic about demand.

“There is appetite,” said Rizk, pointing to the recent successful $500 million sukuk issuance by Dubai’s Mashreqbank as a sign of resilient investor interest.

Saudi and Emirati state-owned firms have increasingly turned to debt markets to fund large-scale infrastructure projects and overseas acquisitions, in line with their respective national strategies to diversify away from oil dependency.

 In Saudi Arabia, banks are playing a critical role in financing mega-projects such as NEOM, Qiddiya, and the Red Sea development, which together require hundreds of billions in investment.

According to Fitch Ratings, credit growth in Saudi Arabia’s banking sector is expected to reach 12–14% in 2025. However, lending growth continues to outpace deposits, widening the funding gap—projected to hit 0.3 trillion riyals ($80 billion) this year.

Despite global challenges, Gulf economies appear poised to push forward with their capital market ambitions, using bond issuances to bridge budget shortfalls and finance ambitious development agendas.