Navigating GCC debt markets

Why credit ratings matter for corporate treasurers in the Gulf states
 

The world of corporate finance is changing rapidly, and nowhere is this transformation more profound than in the Gulf Cooperation Council (GCC) region. As global corporate debt has soared past $35tn, non-financial corporations are reshaping capital markets, driving more than 60% of the expansion since 2008. For treasurers across the GCC, this signals a new era, one where debt capital markets (DCMs) are not just an option, but a cornerstone of financial strategy.

Over the coming years, our region stands poised to assert itself as a leading force in global debt issuance, rivalling emerging markets worldwide and solidifying its status as a hub for sukuk innovation and investment. GCC sovereigns, buoyed by the need to navigate unpredictable oil revenues and declining prices (with forecasts of $70 per barrel in 2025 and $65 in 2026), are expected to ramp up their borrowing activity. 

Coupling this with the expected capital expenditure requirements required to meet strategic ‘Economic Visions’ announced across the region, there is a compelling opportunity for corporates and banks to engage more deeply with debt capital markets, an area still ripe for growth.

Critical tool

At the heart of this evolving landscape lies a critical tool: the credit rating. More than just a numerical score, a credit rating is an objective, independent evaluation of a company’s ability to meet its financial obligations. It distills complex financials, business models, and market dynamics into a transparent benchmark, empowering treasurers, investors, and market participants with the clarity needed to make sound decisions.

Why should a corporate treasurer in the GCC prioritise a credit rating? The reasons are compelling:

1. Broader market access: a credit rating opens the door to capital markets, allowing companies to raise funds directly from investors rather than relying solely on traditional bank loans. This flexibility is vital for financing growth, acquisitions, or new projects.
2. Cost efficiency: securing a strong rating can translate into tangible savings. Rated entities often enjoy lower interest rates and can tap into global pools of capital, reaching investors who demand the reassurance of a credible, independent assessment.
3. Enhanced risk management: ratings provide a clear lens through which to view financial health, supporting strategic planning and effective risk mitigation.
4. Basel III alignment: as regulatory frameworks evolve, investment-grade ratings are becoming ever more valuable, especially under Basel III’s emphasis on external ratings for assessing credit risk.
5. Regulatory and governance compliance: in some industries, ratings aren’t just beneficial, they’re mandatory, ensuring transparency and adherence to governance standards.
6. Strengthened market reputation: A robust rating elevates a company’s standing, instilling confidence among stakeholders and offering leverage during negotiations.
7. Information transparency: Regular, detailed analysis by rating agencies elevates a company’s profile and ensures a steady flow of market-relevant information.

Not a luxury

In short, a credit rating is no longer a luxury; it is a strategic tool that is increasingly being used by institutions across the Middle East to support their capital models. It enables treasurers to optimise funding costs, strengthen market credibility and manage risk. When selecting a rating agency, factors such as analytical depth, geographic reach, and service quality should be at the forefront.

As the GCC continues to chart its course in global finance, corporate treasurers who embrace credit ratings will not only unlock new sources of capital but also position their companies to thrive in a competitive, fast-evolving marketplace.

About the author

Ahmed Hassan is head of corporates BRM, Middle East and Turkiye, at Fitch Ratings