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UAE lenders lead Gulf lenders’ return to capital markets after conflict-induced pause
Gulf banks raise $3.58 billion in Q2 after a war-related pause, with UAE lenders leading issuance activity as investor confidence and market stability return
- PUBLISHED: Mon 27 Jul 2026, 4:20 PM
Banks in the Gulf Cooperation Council (GCC) returned to debt and equity capital markets in the second quarter after a near two-month hiatus caused by regional geopolitical tensions, with UAE lenders accounting for the majority of transactions as confidence gradually returned to the financial sector.
According to data from S&P Global Market Intelligence, GCC banks raised $3.58 billion during the second quarter of 2026, comprising $2.41 billion in May and $1.71 billion in June. While the figure represents a recovery from the market disruption caused by the Iran conflict and the temporary closure of the Strait of Hormuz, it remained below the $5.53 billion raised in the first quarter.
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Banks had largely halted fundraising activity in March and April as investors assessed the economic implications of the conflict. Market participants shifted into a capital preservation mode amid heightened uncertainty, according to investment research cited in the report. However, strong banking fundamentals, government support measures and easing geopolitical tensions encouraged issuers to return to the market.
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The rebound was driven primarily by UAE-based institutions. Five of the eight capital market transactions completed in the second quarter came from UAE banks, underscoring the country’s dominant position within regional banking markets.
Emirates NBD became the first Gulf lender to tap international capital markets after the outbreak of the conflict, issuing $750 million in additional Tier 1 (AT1) capital on May 1. The offering attracted strong investor demand, with subscriptions reaching three times the amount offered despite ongoing market volatility, according to the bank.
First Abu Dhabi Bank (FAB) emerged as the region’s most active debt issuer during the quarter. In June, the lender completed two senior debt transactions under its $20 billion euro medium-term note programme, including a €750 million ($858.3 million) three-year green bond and a separate $300 million issuance.
The quarter also featured a notable equity transaction from Sharjah Islamic Bank, which raised Dh2.59 billion ($704.8 million) through a rights issue. The bank said the offering was more than 3.2 times oversubscribed, with the Government of Sharjah fully subscribing to its allocation while remaining shares attracted subscriptions exceeding 4.5 times the amount available.
Beyond conventional debt and equity fundraising, Islamic finance continued to play a significant role across the region. Several banks turned to sukuk markets during the quarter, highlighting sustained investor appetite for Shariah-compliant instruments.
Dubai Islamic Bank priced a $1 billion AT1 perpetual sukuk in June at a profit rate of 6.25 per cent, one of the region’s largest recent AT1 issuances. The deal generated orders worth $2.3 billion, more than twice the amount offered. Meanwhile, FAB issued a $700 million senior unsecured sukuk due in 2031, attracting an order book exceeding $1.5 billion.
Elsewhere in the region, Qatar-based Dukhan Bank raised $500 million through an AT1 sukuk carrying a 6 per cent yield, while Saudi Investment Bank secured 1.85 billion Saudi riyals ($493 million) from a perpetual AT1 sukuk issued through private placement. Other issuers included Saudi Arabia’s Alinma Bank, Bank Aljazira and Oman-based Dhofar Islamic.
Despite the return of issuance activity, GCC sukuk issuance fell 9 per cent in the first half of the year due to market volatility, S&P data showed. However, strong activity in local-currency markets such as Saudi Arabia and Qatar helped drive a nearly 15 per cent increase in global sukuk issuance to $129 billion. S&P Global Ratings expects the upward trend to continue in the second half and maintained its forecast for global sukuk issuance of between $270 billion and $280 billion in 2026.
Associate Editor Somshankar Bandyopadhyay brings more than three decades of experience to the KT newsroom. Currently, he manages the news production of the business section, ensuring that the top economic and business news of the day reaches its readers.