UAE, Saudi Arabia lead Fitch’s GCC credit growth forecast for 2025

• Fitch expects GCC banks’ debt issuance to reach $30 billion, down 28% from 2024.
• The agency expects strong credit growth in the GCC, especially in Saudi Arabia and the United Arab Emirates.
• The forecast indicates that financing conditions may improve due to lower interest rates on the US dollar and increased confidence in the GCC economy.

Fitch Ratings expects GCC banks to issue more than $30 billion in US dollar debt this year (2025) after their strongest year ever in terms of issuance volume last year, when they issued about $42 billion.

The agency said that this year’s high issuance will be driven by about $23 billion of outstanding debt, a third of which belongs to Qatari banks, and about a quarter each to Emirati and Saudi banks.

The high issuance will also be driven by lower US dollar interest rates, with the agency expecting a 100-basis point decline this year, in addition to strong demand for credit.

The agency expects credit growth in the GCC to be strong, especially in Saudi Arabia and the United Arab Emirates.

The high issuance volume, according to the agency, reflects high credit growth in Saudi Arabia, and banks diversifying their funding bases by increasing the issuance of certificates of deposit, and high debt maturities, against the backdrop of strong investor sentiment.

The agency also expected that dollar debt issuance by Saudi banks will continue to represent the largest proportion of total GCC issuances due to the country’s strong credit growth expectations, especially in the corporate sector.

GCC banks, in turn, accounted for about 18% of emerging market banks’ US dollar issuances in 2024, and 36% excluding Chinese banks.

With hopes that the Fed will cut interest rates, the agency expected GCC banks to benefit as lower interest rates in general are theoretically linked to improved financing conditions.

Geographically, these banks issued several debt instruments last year, in countries including New York, London, Hong Kong and Singapore, which expands their investor base geographically and expands their liquidity base.