RIYADH: Investment-grade bond and sukuk spreads in the Gulf Cooperation Council have returned to levels seen before the US-Iran conflict as easing geopolitical tensions reduced risk premiums, although borrowing costs remain elevated, Fitch Ratings said.
The yield spread between the S&P GCC Sukuk Index and the S&P US Treasury Bond Index narrowed to 67 basis points on June 15, down from around 100 basis points on March 23 and close to its pre-conflict level of 70 basis points on Feb. 27.
The spread on the S&P GCC Bond Index also tightened, falling to 89 basis points from 126 basis points in March and roughly 100 basis points before the conflict.
The improvement in spreads comes as Gulf debt markets continue to see robust issuance activity. GCC bond and sukuk issuances totaled $55.04 billion in the first quarter of 2026, up 5.64 percent from a year earlier, according to Kuwait Financial Center, known as Markaz.
“The future yield trajectory of GCC fixed income remains uncertain,” Fitch said. “The reported US-Iran deal, if signed and implemented, would reduce the more acute geopolitical, credit and market risks linked to the conflict.”
