RIYADH: Fixed income markets across the Gulf and wider Middle East rebounded in October as falling government bond yields in major economies lifted regional bond and sukuk prices, a new analysis showed.  

According to Kamco Invest, the MENA Bonds Index gained 1.73 percent during the month, while the MENA Sukuk Index rose 0.96 percent. The combined MENA Bonds & Sukuk Index advanced 1.5 percent. 

The recovery followed a decline in government bond yields across major developed markets.

The US 10-year Treasury yield fell 35.7 basis points to 4.93 percent in October, while the 30-year yield dropped 32.1 basis points to 5.31 percent. 

In September, Moody’s said that sukuk issuance is expected to recover gradually in the second half of 2026, amid hopes that Gulf Cooperation Council issuers will return to the market, with volumes likely to range between $140 billion and $150 billion, even as conflicts in the region weighed on activity in several key markets. 

“The improvement in global bond markets supported a broad rebound across GCC and MENA fixed income benchmarks. The GCC Credit + HY Index also gained 1.24 percent, broadly matching the 1.26 percent increase in the Emerging Markets USD Agg Index,” said Kamco Invest. 

The October rebound helped reverse part of earlier weakness. Despite the positive monthly total returns, MENA Bonds remained down 2.58 percent and GCC Credit + HY down 2.19 percent for the year to date. 

Conventional bonds lead market activity  

According to the report, primary market activity remained healthy in the GCC, particularly in conventional bonds. 

Government bond issuance reached around $3.7 billion in October, while corporate bond issuance stood at $6.5 billion. Government and corporate sukuk issuance amounted to $500 million each. 

Total GCC bond and sukuk issuance with tenors of more than one year stood at around $11.3 billion, down approximately 33.5 percent month on month from $17 billion in September, but above the $7.3 billion recorded in August. 

Conventional bonds accounted for around $10.3 billion, or more than 90 percent of total issuance.  

Sukuk activity, by contrast, dropped sharply after a particularly active September.

Government sukuk issuance fell to around $500 million from $3.4 billion, while corporate sukuk issuance declined to $500 million from $4.7 billion. 

Citing Fitch data, Kamco Invest added that the overall GCC debt capital market exceeded $1.2 trillion at the end of the third quarter of 2026, with Saudi Arabia representing 48 percent, the UAE 27 percent and Qatar 12 percent of outstanding debt.