Today's Edition
SADEQ ALKHOORI (ABU DHABI)
Investors are still financing UAE companies despite a regional slowdown in bond and sukuk issuance, although access to capital increasingly depends on the returns borrowers are prepared to offer.
Sharjah developer Arada raised $400 million through a five-year sukuk on October 30, attracting more than $700 million in orders at an 8.875% annual coupon. The sukuk carries BB- and B1 ratings from Fitch and Moody’s respectively, both below investment grade, showing that demand can persist for higher-risk issuers at a price.
UAE bond and sukuk issuance fell 2% year on year in the third quarter to $5.56 billion across 11 transactions, compared with a 13.5 percent decline to $34.8 billion across the GCC, according to Kuwait Financial Centre Markaz. GCC corporate issuance fell 38.9 percent.
Speaking to Aletihad, Ritesh Agarwal, Head of Debt Capital Markets at Emirates NBD Capital, attributed the UAE’s performance to strong credit fundamentals, a diversified issuer base and continued access to international liquidity.
“The slowdown in corporate issuance largely reflects a challenging macro environment rather than a fundamental deterioration in credit quality,” Agarwal explained.
Agarwal said higher benchmark yields were increasing borrowing costs, prompting some companies to defer financing while investors scrutinised credit quality, pricing and transaction structures more closely.
He noted that liquidity remained available, particularly for investment-grade issuers, but timing and pricing had become increasingly important.
Sayed Adnan, Chief Business Officer at Graystone Capital, offered a similar assessment, saying frequent, highly rated UAE borrowers, particularly banks and government-related entities, remained attractive to investors.
“In uncertain markets, investors favour quality and familiarity, and the UAE offers both,” Adnan noted.
He added that demand had become more selective, with financing increasingly concentrated in fewer, larger transactions.
Agarwal said Asian participation in GCC debt markets had increased over the past 12 to 18 months, with Chinese banks maintaining demand for sovereign, government-related and financial institution debt.
He cited Emirates NBD’s $750 million seven-year syndicated loan arranged in Asia in February, which attracted 34 banks, as an example of widening regional access to international liquidity.
Refinancing could become an important driver of issuance next year.
Arada said it intended to use part of its new sukuk proceeds to repurchase up to $180 million of existing securities ahead of a June 2027 maturity.
A July 2026 Kamco Invest report estimated UAE corporate bond and sukuk maturities at $125.6 billion between 2026 and 2030.
Looking ahead, Agarwal said any moderation in benchmark yields could encourage issuers that delayed transactions during 2026 to return to the market, particularly for refinancing and longer-term funding.
Adnan added that lower-rated and first-time borrowers would remain more exposed if funding costs stayed elevated.
For UAE companies, capital remains available, but borrowing decisions increasingly depend on credit quality, timing and cost.
