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Table of Contents
Over the past couple of weeks, GBM has spoken to many of the leading issuers and capital markets bankers in the GCC to gauge their views on the current state of the market and lessons learned since the start of the Iran conflict.
The below summarises where there is consensus, where there are clear differences of opinion, and some trends and opinions that may surprise you. No doubt many of these themes will loom large in our discussions on and off stage at the GBM Middle East Festival from June 22 to June 24 in Dubai. Make sure you are ready to be part of the conversation and we look forward to seeing you there!
Strongest market narratives
1. Market resilience exceeded expectations
Despite unprecedented geopolitical disruption, debt capital markets remained functional with deals getting done, spreads remaining relatively stable, and investor appetite persisting. The market demonstrated maturity and depth, with participants adapting quickly through alternative channels, faster execution, and pragmatic pricing.
2. Proactive funding and flexibility won
Issuers who front-loaded funding, maintained market readiness, and executed opportunistically significantly outperformed those who waited for "perfect" conditions. The ability to move quickly when windows opened became the defining characteristic of successful treasury management.
3. Private markets filled the gap
Private placements, private credit, and bilateral facilities provided critical alternative funding sources during public market disruption. While more expensive, these channels offered speed, certainty, and confidentiality. The growth of private markets represents structural shift rather than temporary phenomenon.
4. Investor relations became competitive advantage
Sophisticated, transparent communication with investors enabled superior execution. Issuers who invested in regular roadshows, clear messaging, and relationship building achieved better pricing, faster execution, and more diversified distribution than peers.
5. Structural changes accelerating
Bank liquidity constraints, sukuk market maturation, private banking wealth bid, and portfolio company issuance represent structural market evolution rather than cyclical changes. These trends will persist and intensify regardless of geopolitical resolution.
Areas of significant divergence
New issue premium magnitude
Participants disagreed on whether premiums were 5bp, 10bp, 15bp, or higher, with variation by credit quality, timing, and deal structure. Some argued premiums had already disappeared by May, while others saw them persisting.
Asian investor appetite
Views ranged from "the tap is off" to "Asia remained strong" depending on asset class (loans vs bonds), credit quality, and specific geography (China vs Japan vs Southeast Asia). No clear consensus emerged.
Timing of market normalization
Opinions varied from "markets are already normal" to "we need resolution before meaningful activity”. Uncertainty about conflict duration prevented consensus on forward planning.
Appropriate pricing strategy
Debate between paying modest premiums for execution certainty versus waiting for better conditions. Some advocated pragmatism while others maintained discipline on pricing, reflecting different funding urgencies and risk tolerances.
Surprising and contrarian viewpoints
Spreads tightened during conflict
The counterintuitive finding that Saudi and Oman credit spreads actually tightened during the conflict challenged assumptions about risk pricing. This reflected flight to quality and strong fundamentals rather than market dysfunction.
Private banking bid proved more genuine than institutional
The discovery that private banking orders were less inflated than institutional orders contradicted conventional wisdom. Wealth management clients provided more stable, buy-and-hold demand than traditional asset managers.
Execution speed matters more than pricing
Multiple participants argued that 5-10bp premium for immediate execution was preferable to waiting for better pricing, reversing traditional treasury priorities. This reflected new reality of compressed windows and overnight volatility.
International investors more engaged than expected
Despite travel restrictions and headline risk, US and European investors remained active and in some cases increased participation, viewing wider spreads as opportunity rather than risk.
