Raed Al-Momani, head of asset and wealth management at Capital Investments, confirmed that the bond market in the Middle East started 2026 with strong performance, before geopolitical developments and war led to a near-complete halt of new issuances in the recent period, noting that the market has gradually resumed activity after those events ended.

He explained that total issuances since the beginning of the year to date, including private placements, exceed last year's levels, while public issuances are still about 6% lower compared to the same period last year.

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He noted that Saudi Arabia had completed the bulk of its sovereign issuance program before the recent events broke out, which spared it from the impact of the volatility that markets later experienced.

He added that issuers primarily monitor credit spreads when pricing bonds, noting that these spreads widened significantly during the war period, but have now returned to normal levels or close to what they were before the events, with a limited exception for some markets such as Bahrain, whose spreads remain above pre-war levels.

He stressed that markets have begun to see a gradual return of issuances from banks, companies, and governments, explaining that the market is anticipating new offerings from a number of financial institutions in the region. He also noted that recent issuances in the UAE and Saudi Arabia came with pricing that he described as fair, largely in line with previous issuance levels, without exceptional price premiums related to geopolitical events.

Global Yields

Regarding the rise in global yields, he explained that borrowing costs have become higher compared to previous periods, even with the decline in credit spreads, due to the increase in benchmark yields on government bonds, led by US Treasuries.

He added that any issuer with a lower credit rating is forced to pay an additional premium above the risk-free rate, which raises the final cost of financing, and this is reflected in various debt markets around the world.

He pointed out that Japan may represent one of the most prominent potential sources of risk in the coming period, noting the continued rise in Japanese bond yields due to structural factors in the economy, amid a monetary policy that remains less tight compared to the scale of existing challenges.

He explained that the continued rise in Japanese yields could extend its impact to global markets, given the pivotal role that Japan plays in international finance and investment markets.

Regarding current investment opportunities, Raed confirmed his preference for the 'ladder' strategy in building investment portfolios, focusing on short- and medium-term bonds, noting that he does not expect additional increases in US interest rates this year.

He added that the Middle East and North Africa region still offers attractive opportunities, particularly in high-yield bonds with relatively low credit ratings, with a preference for short maturities in the current environment of debt markets.

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