Gulf bond markets extend their rally despite uncertain outlook
Welcome to this week’s Fortune Gulf Brief. We’ll be covering: Gulf bonds continue to rally despite geopolitical challenges Iraq’s new PM rolls out the red carpet for U.S. companies U.S. Fanatics bets on UAE gaming with new JV State Street deepens Saudi presence with fund license The 3 things we enjoyed reading this week The Gulf bond market rally is picking up momentum. In the week to 26 June, Qatar Energy, Avilease, Emirates NBD, FAB, Dukhan and Burjeel issued a combined $7.5bn of debt, a pretty hefty figure. Notable among them was UAE healthcare group Burjeel Holdings’ $500 million debut sukuk issuance. It was more than three times oversubscribed, with the orderbook peaking at $1.6 billion. International investors took 61% of the allocations, led by buyers from the U.K. (34%) and offshore U.S. accounts (24%), highlighting global confidence in Burjeel and the UAE market. Gulf investors accounted for the remaining 39%. Listed on the Abu Dhabi Securities Exchange, Burjeel’s $500 million sukuk marks the opening tranche of a $1.5 billion sukuk program , which was put on hold with the outbreak of the U.S.-Iran war in February. Gulf primary bond issuance came to an abrupt halt in the wake of the conflict, with corporate and sovereign bond yields jumping as geopolitical tensions escalated. But the markets have staged a “relief rally” since the ceasefire came into effect on 8 April, with GCC fixed-income yields benefiting from a reduction in geopolitical risk premiums. I explore all the moving parts in my online piece here. Yield spreads between GCC investment-grade debt and U.S. Treasury bonds have narrowed to pre-war levels, reflecting investor confidence in Gulf states’ robust government reserves and optimism that the conflict will not harm issuers’ finances in the long term. This has seen both sovereigns and corporates raising billions of dollars in conventional bonds and sukuk over recent months. Long considered safe havens within emerging markets, five of the six Gulf