GULF COOPERATION COUNCIL — GCC bond and sukuk markets rallied in mid-2026 after the Iran-U.S. ceasefire was signed on April 8, 2026. This recovery followed sell-offs spurred by regional conflict that began at the end of February 2026.

By the end of March 2026, many GCC US dollar sukuk and bond yields had widened to five-year high spreads. Fitch Ratings stated in a mid-June 2026 report that GCC fixed-income yields are benefiting from a decline in geopolitical risk premiums. The spread on the S&P GCC Bond Index fell to 89 basis points in mid-June 2026, down from 126 basis points in March 2026. The spread on the index was approximately 100 basis points before the conflict.

Azad Zangana, head of GCC macroeconomic analysis at Oxford Economics, noted that bonds have rallied and yields have decreased since the signing of the ceasefire and memorandum of understanding. However, spreads on high-yield GCC sukuk remain heightened. A combined total of $7.5 billion in debt was issued by QatarEnergy, AviLease, Emirates NBD, First Abu Dhabi Bank, Dukhan Bank, and Burjeel Holdings in the week ending June 26, 2026.

Demand for Burjeel Holdings' $500 million sukuk was 3.2 times oversubscribed, and it was priced with a 7% profit rate and a yield of 7.125%. This yield represents the lowest 5-year yield by a GCC-based private non-investment grade corporate issuer since 2020. The sukuk is scheduled to be listed on the International Securities Market of the London Stock Exchange on July 1, 2026.

On June 3, 2026, Bahrain issued $1 billion through a 10-year USD bond, marking it as the first Gulf sovereign to issue debt since the start of the U.S.-Iran conflict in February 2026. The UAE extended a $5.4 billion swap line to Bahrain in mid-April 2026. Data from the Central Bank of Bahrain shows that the kingdom's foreign exchange reserves fell 56% month-on-month to $1.5 billion at the end of May 2026. Excluding a dip in April 2020, Bahrain's foreign exchange reserves at the end of May 2026 were at their lowest level on record. Bahrain is the only GCC state not rated investment-grade by the three major rating agencies. GCC sukuk generally have lower average yields than GCC bonds due to broader demand from Islamic banks.

GCC fixed-income yields are closely correlated to U.S. Treasuries because all Gulf currencies, except the Kuwaiti dinar, are pegged to the U.S. dollar. Fitch Ratings does not forecast any Federal Reserve rate cuts in the second half of 2026. Over three-quarters of economists polled expect the Federal Reserve to hold interest rates steady for the remainder of 2026.