GCC Banks May Largely Resort To Private Placements And Syndicated Loans If Iran War Persists: Fitch

(MENAFN- Gulf Times) The GCC (Gulf Co-operation Council) banks are likely to make greater use of private placements and syndicated loans if the Iran conflict persists, according to Fitch, a global credit rating agency.“Even if conditions stabilise and public markets reopen, we expect 2026 issuance to remain below 2025's record level because of weaker credit growth and wider credit spreads,” it said in a latest report.

Though the GCC bank liquidity conditions could deteriorate if the war is more prolonged or severe than its base case, Fitch however, said banks' strong liquidity buffers and capital and liquidity support from the authorities could ease associated risks to credit profiles.“We expect private placements will be the main funding channel for the GCC banks this year if the conflict persists, but if geopolitical conditions improve banks will likely return to public markets,” according to the rating agency.

The GCC banks' dollar debt issuance, excluding certificates of deposit (CDs), was about $17.5bn in the first four months (4M) of 2026, up by around 20% year-on-year, or about $27bn including CDs.

“This mainly reflects the strong issuance in January. Senior notes, mostly from the UAE and Qatari banks, were 41% of issuance, followed by 35% from CDs, mainly from Saudi banks, and 24% from AT1 (additional Tier 1) and Tier 2 instruments, also mostly from Saudi Arabia,” it said.

Credit spreads widened across most of the capital structure after the conflict began, but have since tightened, it said, adding between February 28 and end-April, senior and Tier 2 spreads widened on average by 6bp (basis points), while AT1 spreads tightened by about 12bp.

Fitch believes that the resilience of the GCC banks' AT1 instrument pricing partly reflects a tendency towards buy-and-hold strategies among Shariah-compliant investors; almost 65% of the GCC bank AT1s are sukuk.

It also reflects investor expectations around government support, strong regional capital buffers, and such instruments being likely to be called at the first reset date.

The GCC banks' year-to-date private placements are over $4.3bn, mostly in senior debt, it noted.

Highlighting that banks' access to other funding channels remains“strong”; it said the GCC banks have raised about $2.3bn in syndicated loans year-to-date, supported by strong regional liquidity and continued foreign investor appetite.

Repo funding is another option, given banks' large holdings of investment-grade securities, according to Fitch.

GCC Fitch banks

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