Geopolitical strain and a stalled post-Ramadan rebound combined to sap momentum from debt markets across the Middle East and North Africa in the opening quarter of 2026, with bond issuance falling 12 percent from a year earlier to $48.1 billion, according to LSEG data. The number of deals also declined 11 percent, underscoring a broader slowdown in fundraising activity.
The year began with energy. January delivered a rush of issuance, but the pace softened in February and nearly stalled in March as regional tensions intensified amid the Iran-Israel conflict. What is typically a seasonal slowdown around Ramadan deepened into something more structural, as issuers retreated and investors turned cautious.
Market participants had expected issuance to revive after Ramadan, as it often does. Instead, the rebound never arrived.
Analysts point to uncertainty surrounding the conflict—not just the violence itself, but the absence of clarity over how long tensions may linger—as a major force keeping borrowers on the sidelines. That uncertainty has made timing new deals difficult, especially in the GCC’s dollar debt markets, where issuance was notably muted through much of March.
Even in a softer quarter, Saudi Arabia remained the region’s dominant funding engine, accounting for 58 percent of total bond proceeds raised. The kingdom’s early-year blockbuster $11 billion four-part bond sale set the tone before market momentum faded, while Saudi Aramco added another $3.95 billion.
The UAE followed as the second-largest contributor, representing 27 percent of deals, helped by Abu Dhabi’s $2.99 billion raise.
Corporate borrowers carried most of the funding load, issuing $32 billion compared with $16 billion from sovereigns and government-linked agencies. Financial institutions were the single biggest contributor, accounting for 44 percent of proceeds, while governments and agencies made up roughly a third.
Islamic finance also felt the strain.
Regional sukuk issuance dropped 17 percent year-on-year to $14.6 billion, shrinking to just 30 percent of total bond proceeds—its smallest share in three years. The dip suggests the slowdown extended beyond conventional debt into a segment often seen as resilient during volatility.
On the banking side, HSBC led MENA bond bookrunner rankings for the quarter with $4.08 billion in proceeds and a 9 percent market share, narrowly ahead of Standard Chartered at $4.05 billion. Emirates NBD ranked third with $2.7 billion.
In sukuk underwriting, HSBC again topped the table, followed by Dubai Islamic Bank and Emirates NBD.
For now, the region’s debt markets appear caught between strong sovereign funding needs and a geopolitical backdrop that is making issuers hesitate. January hinted at a busy year. By March, that optimism had largely given way to caution.
