Today, Gulf banks are increasingly looking east – to markets such as Singapore, Hong Kong and Taipei – as strategic alternatives for capital raising. Private placements, Formosa bonds and rising interest in Panda bonds are providing new avenues to tap Asia’s capital markets.
The appeal lies in a combination of factors: competitive pricing; growing demand from Asian institutional investors; access to longer tenors; and the opportunity to diversify away from traditional investor pools. For large and increasingly sophisticated Gulf issuers, this eastward shift enhances financial resilience, widens liquidity access and supports long-term funding stability.
DBS, Singapore’s and southeast Asia’s largest bank by assets, is playing a key role in this quiet transition. It has positioned itself as a trusted conduit between Gulf issuers and Asia’s expanding pool of fixed-income investors.
“We’re not at the initial stage anymore – there’s been growing interest over the years,” says Clifford Lee, global head of investment banking at DBS. “We are now at a point where, if the global market remains fragmented, intra-regional capital flows between the GCC [Gulf Cooperation Council] and Asia will pick up meaningfully.”
From private placements to public interest
Asian investors have historically paid limited attention to GCC debt, largely because there was little visibility on local issuance. That has been gradually changing.
DBS’s early engagement with issuers such as Ooredoo (formerly Qtel) helped pioneer the trend. In 2009, DBS was joint lead manager for Qtel’s inaugural $1.5 billion bond issuance under its global medium-term note programme, which attracted $13 billion in global orders – including strong Asian participation.
If current conditions hold, Middle East-Asia capital flows will become a defining feature of the next chapter in global finance
Clifford Lee, DBS
“When we brought Ooredoo to Asia, Asian investors became the key driver for price tightening,” Lee recalls. “That opened the eyes of other GCC issuers.”
Since then, banks such as Saudi National Bank (SNB), Burgan Bank, Qatar National Bank (QNB), Al Rajhi Bank, Commercial Bank of Qatar and Mashreq have entered Asian private placement markets. “Private placements serve as a proof of concept,” Lee explains. “Issuers want to validate real investor demand before moving to larger, public transactions.”
The Singapore advantage
While Hong Kong remains a key financial hub, Singapore is emerging as an appealing launchpad for Gulf issuers seeking broader Asian access. “Hong Kong tends to be more China-centric, particularly around CNH issuance,” says Lee. “Singapore is more impartial – we’re not aligned towards any particular bloc, and that’s attractive to Middle East issuers.”
Singapore’s multi-currency issuance capability – USD, SGD, CNH, TWD and HKD – makes it particularly attractive. Gulf banks tapping Asia through Singapore can do so via public bookbuilding or private placements, with the flexibility to pivot between markets depending on pricing, tenor, regulatory considerations and investor appetite.
As more GCC banks diversify their funding base and the global trading system becomes more fragmented, this optionality matters.
Building familiarity and depth
Yet challenges remain. Chief among them remains investor familiarity. “Asian investors haven’t historically looked at GCC credit, not because of poor quality, but because there was no supply,” Lee notes. “And without supply, you can’t initiate credit assessment or onboarding.”
This is a classic chicken-and-egg problem. But as more deals come to market, the cycle is starting to break. “We’re seeing appetite deepen across Asian investors, including Chinese banks, fund managers, insurers and private banks,” he says. “But regular supply is key.”
Secondary market liquidity is also improving, as more Asian institutions begin to trade GCC names – a step that supports long-term price stability and investor confidence.
Reflecting on recent shifts, Ritesh Agarwal, head of debt capital markets at Emirates NBD Capital, notes a positive trajectory. “We’ve seen a clear return of Asian real-money investors into GCC transactions over the past six to nine months, especially with pricing more attractive than that of comparable Asian peers [with similar ratings],” he says. “It’s no longer just hedge funds – long-only institutions are coming back.”
Formosa and Panda bonds: Deepening diversification
As they look to broaden funding sources, Gulf banks are increasingly exploring instruments such as Formosa bonds – foreign currency bonds issued by non-Taiwanese organisations in Taiwan – and Panda bonds, which are renminbi-denominated bonds issued onshore in China by offshore organisations.
DBS is working with several GCC financial institutions to gain regulatory approval for an inaugural Panda bond issuance. “Chinese regulators have become very receptive,” says Lee. “We’ve taken banks onshore to meet investors and the authorities. Once regular issuance flow begins, this could unlock access to a $20 trillion-plus market.”
Agarwal at Emirates NBD Capital is more cautious on the near-term potential. “There’s interest in Panda bonds from GCC issuers, but most find the process onerous – translations, onshore ratings, approvals to repatriate funds – and the pricing can shift before you’re ready to go,” he says. “Unless there’s a clear diversification or pricing benefit, it’s hard to justify the complexity. But if one or two issuers manage to pull it off, I think momentum will follow.”
Real ESG appetite still mostly comes from UK and continental European investors – we haven’t seen strong demand from Asian buyers just yet
Ritesh Agarwal, Emirates NBD Capital
In the meantime, Formosa bonds have become a well-established channel for GCC issuers. While known for their access to long-term institutional liquidity, particularly from Taiwanese insurers, most GCC bank issuances have so far focused on five-year maturities – balancing funding diversification with asset-liability needs.
In May, Al Rajhi Bank issued its debut $500 million five-year Formosa sukuk in Taipei, joining SNB, QNB, First Abu Dhabi Bank, Emirates NBD and Abu Dhabi Commercial Bank (ADCB) in the growing list of Formosa issuers from the GCC banking sector.
Emirates NBD Capital was one of the structuring agents for Al Rajhi Bank’s inaugural Formosa sukuk, which Agarwal believes underlined the growing depth of Taiwanese and broader Asian demand for diversified GCC instruments. “We’re seeing a lot of Formosa transactions in the $400 to $700 million range, and the pricing advantage often outweighs the additional listing requirements, which is not very onerous,” he says.
Emirates NBD is also active in Australia through its AUS$4 billion Kangaroo Debt Issuance Programme. Kangaroo bonds – issued by foreign organisations in the Australian market – allow the bank to tap long-dated liquidity from Australian and Asian investors, offering tenors that are often difficult to achieve in US or European markets.
Sustainable finance: A natural alignment?
Singapore’s emergence as an environmental, social and governance (ESG) finance hub could further accelerate Gulf-Asia credit links. With the Monetary Authority of Singapore (MAS) developing a transition finance taxonomy and the Singapore government having launched its first green bond syndication in 2022, the city-state has positioned itself as a structuring centre for sustainable debt.
“Singapore offers the technical expertise, second-party opinion providers and neutrality to bring Gulf issuers into markets that best fits them,” says Lee. “We’ve built the infrastructure to evaluate and structure credible ESG-labelled bonds, and that’s aligned with the momentum we’re seeing from the Gulf’s net-zero transition plans.”
Sustainable finance is a major growth lever in the Gulf: Middle East issuance reached $16.7 billion in the first nine months of 2024, led by financial institutions, and is projected to reach $18 billion to $23 billion in 2025, according to S&P Global. That momentum, along with Singapore’s deep ESG structuring capabilities, could make Asian issuance channels an attractive proposition for Gulf banks seeking labelled finance.
But so far, the bulk of demand for ESG-labelled GCC debt is still concentrated in Europe. “Real ESG appetite still mostly comes from UK and continental European investors – we haven’t seen strong demand from Asian buyers just yet,” says Agarwal.
Long-term shift
Looking ahead, Lee sees greater institutional engagement on both sides. “Expect more reverse roadshows – Asian investors visiting the Gulf – and more GCC banks building a presence in Asia,” he says
In a fragmented financial world, regional connectivity is becoming more valuable. Singapore’s neutrality, Asia’s growing liquidity and the strategic logic of diversification are all converging to create new issuance pathways for Gulf banks.
“We’re not at the peak of the J-curve yet,” Lee says. “But if current conditions hold, Middle East-Asia capital flows will become a defining feature of the next chapter in global finance.”
