Asian investors are sharply increasing allocations to Gulf bonds and syndicated loans this year, reflecting deepening economic ties with the region and growing uncertainty in the U.S. and China.
Bond issuance in the Middle East & North Africa surged 20% YoY to $126B in the first nine months of the year — with full-year records likely both for the region and for emerging market debt outside China (LSEG).
A significant portion of this push is driven by investors seeking higher yields, stronger credit fundamentals, and exposure to the Gulf’s robust growth outlook. The IMF projects Gulf economies will grow 3.9% in 2025 and 4.3% in 2026, outperforming global growth expectations.
🔹 Key Market Shifts
- Chinese investors are actively diversifying away from U.S. assets, according to HSBC.
- Asia-Pacific syndicated lending into the Middle East tripled to $16B+ YTD.
- Gulf–Asia trade hit a record $516B, up 15% YoY.
- Asian allocations in Gulf debt have jumped to 15–20%, up from 5–7% in early 2024 (Emirates NBD).
- Asian investors bought 40% of AA-rated Qatar’s recent $1B 3-year bond, priced at just 15 bps over U.S. Treasuries.
Gulf bonds typically offer 10–20 bps more yield than similarly rated Asian credits, according to UOB Asset Management.
🔹 Expanding Into Yuan Markets
Gulf borrowers are exploring Panda bonds to tap China’s $20T+ domestic market. Early examples include:
- Sharjah issuing 2B yuan ($280M) in October
- Saudi National Bank issuing the first Singapore-dollar bond in late November
As Gulf issuers diversify funding channels and Asia continues reallocating capital, this cross-regional debt corridor is poised for even stronger momentum.