Markaz: GCC Fixed Income markets sees slower issuing activity in Q1 2023 with total issuance of USD 28.3 billion marking a decline of 22% year-on-year

Kuwait Financial Centre “Markaz” released its research report titled “GCC Bonds and Sukuk Market Survey for Q1-2023”. In its quarterly Fixed Income Report, Markaz explains that Primary debt issuances in the GCC were off to the slowest start in three years during the first quarter of the year due to the tightening of monetary policy as well as continued macro volatilities. Primary issuances of Bonds and Sukuk in the GCC amounted to USD 28.3 billion in the first three months of 2023 compared to USD 36.3 billion raised during the same period in 2022, a decline of 22.1% year-on-year. In terms of the number of issuances, there were 62 primary debt issuances in the GCC during Q1-2023 compared to 76 issuances for the same period in 2022.
Geographical Allocation: 
Saudi-based issuers led the GCC Bonds and Sukuk market during Q1 2023, raising a total of USD 21.3 billion, representing 75.4% of the total value raised in the GCC, followed by the UAE entities with 19.9% of the total primary issuances or equivalent to USD 5.6 billion. Qatar entities raised a total of USD 0.9 billion representing 3.2% of the total primary debt issuances while Kuwaiti issuers raised a total of USD 0.4 billion in primary debt, representing 1.6% of all issuances. There has not been any debt issuance by Bahrain or Oman entities during Q1 2023.
Sovereign vs. Corporate: Sovereign issuances by GCC entities made up 60.2% of the total value of GCC primary issuances during Q1 2023, amounting to USD 17.0 billion and down 21.2% year-on-year from its value in Q1 2022. Corporate primary issuances, on the other hand, amounted to USD 11.3 billion during Q1 2023 constituting 39.8% of the total value of GCC primary issuances and marking a decline of 23.5% year-on-year from its value in Q1 2022.
Conventional vs. Sukuk: Conventional issuances increased by 167.7% year-on-year during Q1 2023, with a total of USD 23.0 billion raised, representing 81.4% of the total value of primary issuances in the GCC. On the other hand, Sukuk issuances made up 18.6% of the total value of primary issuances during Q1 2023, declining by 81.1% year-on-year to USD 5.2 billion, compared with USD 27.7 billion raised in Q1 2022.
Sector Allocation: The Government sector accounted for the largest amount of primary debt issuances by value, raising a total of USD 11.5 billion, or 40.7% of the total value of issuances in the GCC in Q1 2023. The Financial sector (including quasi-government entities) was second in its contribution to the total value of primary issuances in the region, raising a total value of USD 10.9 billion and representing 38.6% of the total market. 
Maturity Profile: Issuances with tenors of 10-30 years dominated the GCC debt capital markets by total value, raising a total of USD 13.5 billion, or 47.8% of the total value of issuances. Issuances with tenors of less than 5 years came in second with a total value raised of USD 7.2 billion, or 25.5% of the total value of issuances.
Issue Size Profile: The size of GCC Bonds and Sukuk primary issuances during the first quarter of the year ranged from USD 4 million to USD 3.5 billion. Issuances with principal amounts greater than or equal to USD 1 billion raised the largest amount totaling USD 22.0 billion, representing 78% of the total primary issuances.
Currency Profile: US Dollar-denominated issuances led the GCC Bonds and Sukuk primary market in Q1 2023, raising a total of USD 25.6 billion or 90.4% of the total value of GCC primary issuances. This was followed by Saudi Riyal, where SAR denominated issuances raised a total of USD 1.1 billion or 3.9% of the total value of issuances in the GCC. 
Rating: In Q1 2023,  a total of 90% of GCC primary Bonds and Sukuk issuances (in terms of value) were rated by either one of the following rating agencies: Standard & Poor’s, Moody’s, Fitch and/or Capital Intelligence, of which 86% were rated as Investment Grade Issuances.

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