The Middle East DCM Playbook 2025

Middle East DCM is dominated by the major global banks. Citi was the leading bank for Middle East DCM in Q1 2025 with a 10.2% share of the market on revenues of $9 million ahead of a tight group of HSBC, Standard Chartered and JP Morgan, whose market shares were 8.9%, 8.8% and 8.7% respectively. 

In terms of volume by bookrunner, HSBC led in Q1, followed by Standard Chartered, while Citi and JP Morgan took the third and fourth spot. 

However, Middle East quarterly issuance also reveals the growing influence of regional banks, with Emirates NBD and Abu Dhabi Commercial Bank both placing in the top 10 of Dealogic league tables. 

In terms of client split, financial institutions are estimated to represent around 25% of market activity with sovereigns accounting for a further 25%-30%. Within that latter category, the UAE’s liquidity position means it tends not to borrow as heavily as some of the other GCC states such as Saudi Arabia or Bahrain. 

Debt capital raising has thrived in the Middle East post-pandemic, bolstered by high commodity prices and economic growth across the real estate and manufacturing sectors, coupled with growing bank balance sheets driven by rapid growth in sovereign and corporate – including government related entities – net volumes.  

This unique set of circumstances has enabled issuers to take more from the market with substantial volumes in the first half of 2024 making Saudi Arabia the largest US dollar debt issuer in emerging markets (excluding China), according to Fitch Ratings, and the largest sukuk issuer globally. 

When looking at how demand breaks down, there is recognition that the regional investor base is resilient and continues to anchor all transactions. 

“Outside of the region, the US is the standout geography, followed by the UK and Asia,” says Victor Mourad, co-head of CEEMEA DCM, Citi. “Allocation statistics show that Asian demand has become more selective over the last couple of years.” 

One of the key emerging themes in Middle East DCM is the growing role of private banking, which historically had limited involvement in capital markets transactions. Over the past 18 months, however, it has become an increasingly important source of liquidity for issuers in the GCC. DCM desks are now actively leveraging private wealth channels to support bookbuilding – particularly for higher-yielding and longer-tenor deals.  

The inverted yield curve that persisted for much of last year has shifted toward a more typical upward-sloping structure, with short-term rates now slightly below long-term rates. This has made longer-dated instruments more attractive to private investors seeking to lock in higher yields. 

From a trend perspective, last year was a relatively favourable period for issuers to come to market given relatively low volatility and robust liquidity. Even when the news cycle turned unfavourable, any subsequent market weakness was short lived.  

Another interesting trend noted by market participants is that Shariah-compliant investors are becoming more disciplined. “There was a time when they were less sensitive to price,” says Ritesh Agarwal, head of DCM, Emirates NBD. “We are now seeing a lot of pushback and investors happy to walk away if they feel the pricing isn’t right.” 

There has been much discussion about the extent to which sustainable finance has attracted ethical investment that might previously have gone into sukuk, although there is evidence to suggest that the two themes have converged with many sharia compliant bonds now having a strong ESG dimension. 

According to LSEG, the ESG sukuk market is growing fast. In 2024, issuance of ESG sukuk grew by 14% year-on-year to $15.2 billion. Over that period, it represented 1.8% of total ESG bond issuance and 6.1% of total sukuk issuance. 

There was a time when they were less sensitive to price. We are now seeing a lot of pushback and investors happy to walk away if they feel the pricing isn’t right.

Ritesh Agarwal, Emirates NBD

But with ESG debt still accounting for a smaller percentage of total debt finance, it is clear that there is plenty of scope for growth in sustainable sukuk – especially as potential investors now expect bond issuers to have a well-defined ESG strategy. 

At regulatory level, the Central Bank of the United Arab Emirates is developing a sustainable Islamic M-bill (monetary bill) programme to establish a framework for Islamic financial institutions to engage in sustainable financing and green sukuk, while the Qatar Central Bank has issued a sustainable finance framework that addresses the integration of Islamic finance with sustainability criteria. 

However, there remains uncertainty around the timing of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) Standard 62 aimed at standardising sukuk issuances. In late April, the organisation’s chair of the board of trustees said the first draft was being amended based on consultation feedback. 

Formosa bonds (bonds issued by foreign entities in Taiwan but denominated in a currency other than the Taiwan dollar) have maintained their strong momentum among GCC issuers seeking to tap long-term institutional liquidity and broaden their funding base. Emirates NBD, ABCD, Al Rajhi Bank and Saudi National Bank  have all issued such bonds in 2025 to date, with formosas being sold to both Taiwanese and offshore investors. 

While expectations are for another strong year, few market participants are prepared to predict that 2025 volumes will match those recorded last year given the potential impact of a slowdown in global DCM activity. 

The funding needs of GCC sovereigns are expected to increase with the projected fall in oil prices, modest demand growth and ample global supply. These sovereigns continue to address diversification goals and finance ambitious government projects while addressing fiscal deficits. 

Aside from sovereign, supranational and agency bonds, banks and corporates are entering the market to finance growth plans, diversify their funding base and use DCM as a stepping stone to potential equity raises. 

Banks will need to be innovative and provide continuous feedback and investor engagement to ensure that issuers seize the appropriate window

Bank executive

This positive outlook was a constant among the DCM banks interviewed in the region, each of whom were optimistic about the current climate for debt capital raising. Upcoming debt maturities was identified as the most important factor driving growth. 

One of the banks interviewed anticipated blended finance, structured and private debt products becoming a larger part of regional DCM activity, while another referred to funding diversification becoming critical for issuers keen to demonstrate their ability to access DCM as a source of funding. 

Other identified challenges include documentation and regulatory hurdles and pricing uncertainty as a result of rate volatility. 

“Recent volatility has impacted pricing and delayed many transactions,” said one bank executive. “Banks will need to be innovative and provide continuous feedback and investor engagement to ensure that issuers seize the appropriate window. Additionally, banks will need to support these issuers both on the primary distribution and secondary trading.” 

The only area where the interviewed banks diverged significantly was in their views on the most important differentiating factor for banks in the DCM space going into 2026. Suggestions included: 

• The ability to show value-added non-vanilla solutions 

• The ability to support issuers via distribution and provide insights about investor appetite 

• The ability to deploy balance sheet and source private placements 

• Client communication and knowledge of sukuk structuring 

Banks are having extensive discussions with debut issuers regarding the format they should issue in (sukuk or conventional), whether to include US investors and the timing of documentation versus issuance windows. 

It is important for issuers to capture any favourable window, because who knows what will happen a few weeks or months down the line

Ritesh Agarwal

Inevitably, pricing is high on the list of priorities for issuers. However, there also appears to be greater realism around interest rates after a few years in which many potential issuers held off on the expectation that rates would fall to previous low levels. 

Front loading is another theme that has developed over the course of 2025 as issuers looked to get ahead of any problems caused by the US-led tariff war.  

Emirates NBD’s Agarwal refers to issuance volume in Saudi Arabia in the first six weeks of the year reaching almost half the total issued in the whole of 2024. 

“Rates may go down, but it doesn’t automatically mean that investors will be willing to deploy cash, so it is important for issuers to capture any favourable window, because who knows what will happen a few weeks or months down the line,” he says. “A lot of deals fell below par last year but we are seeing decent performance in the secondary market in 2025, which shows that investors are still in risk-on mode.” 

In any growing market, issuers inevitably become more sophisticated and this demand has to be matched with proper advice and execution. Banks will have different strengths in terms of flow business versus structured deals versus bank capital transactions, for example, so issuers have to make their decisions based on several factors including precedent. 

In some cases, the issuer will prioritise banking partners with a presence in every jurisdiction it wants to attract investors from, although regional banks still have an important role to play and there is often collaboration to get deals done. 

With global rates stabilising and investor appetite gradually returning, we are cautiously optimistic about CEEMEA debt capital markets for the second half of the year

Abdeslam Alaoui, Deutsche Bank

With a backlog of issuers waiting to access the market, banks can advise on competing supply and sequencing and are also keen to connect issuers with investors in non-deal formats, which makes deal execution much swifter and more efficient while maintaining important connectivity and relationships with global investors.

A sukuk structuring team that can advise on different structures is a valuable asset for any bank looking to differentiate itself in Middle East DCM, as is the ability to run a full deal. “Our biggest competitive advantage is the liquidity we get from the region, including private banking and Islamic liquidity on sukuk trades,” says Agarwal. “We act as a conduit for issuers looking to access liquidity in the region.”