Gulf Bond and Sukuk Markets Recover in October as Global Yields Decline

Gulf and wider Middle Eastern fixed income markets rebounded in October as falling government bond yields in major economies supported regional bond and sukuk prices, according to a new analysis by Kamco Invest.

The MENA Bonds Index rose 1.73 per cent during the month, while the MENA Sukuk Index gained 0.96 per cent. The combined MENA Bonds and Sukuk Index advanced 1.5 per cent, recovering some of the losses recorded earlier in the year.

The improvement followed a decline in yields across major developed markets. The yield on the US 10-year Treasury fell by 35.7 basis points to 4.93 per cent in October, while the 30-year yield dropped 32.1 basis points to 5.31 per cent.

Kamco Invest said the improvement in global bond markets supported a broad recovery across Gulf Cooperation Council and wider MENA fixed income benchmarks. The GCC Credit and High Yield Index gained 1.24 per cent, close to the 1.26 per cent increase in the Emerging Markets USD Aggregate Index.

Despite the monthly gains, regional markets remained in negative territory for the year. MENA Bonds were down 2.58 per cent year to date, while the GCC Credit and High Yield Index had declined 2.19 per cent.

Primary debt market activity across the GCC remained active in October, although total issuance fell compared with September. Government bond issuance reached approximately $3.7 billion, while corporate bonds accounted for $6.5 billion.

Government and corporate sukuk issuance stood at around $500 million each.

Total GCC bond and sukuk issuance with maturities of more than one year reached approximately $11.3 billion, a decline of 33.5 per cent from the $17 billion recorded in September. However, issuance remained above the $7.3 billion reported in August.

Conventional bonds dominated activity, accounting for around $10.3 billion, or more than 90 per cent of total issuance.

Sukuk activity slowed considerably after a particularly strong September. Government sukuk issuance fell to approximately $500 million from $3.4 billion, while corporate sukuk issuance dropped to the same level from $4.7 billion.

The decline comes as market participants anticipate a gradual recovery in sukuk issuance during the second half of 2026. Moody’s said in September that volumes could reach between $140 billion and $150 billion as GCC issuers return to the market, although regional conflicts have weighed on activity in several countries.

Data from Fitch cited by Kamco Invest showed that the GCC debt capital market exceeded $1.2 trillion at the end of the third quarter of 2026. Saudi Arabia accounted for 48 per cent of outstanding debt, followed by the UAE with 27 per cent and Qatar with 12 per cent.

The October performance indicates that regional debt markets remain sensitive to movements in international borrowing costs, while conventional bonds continue to account for most new issuance across the Gulf.