Kuwait is set to issue a multi-tranche dollar bond worth up to $2 billion on Wednesday, July 23, 2026. This move comes despite the country experiencing near-daily missile and drone attacks from Iran over the past two weeks. This will be Kuwait's first international bond issuance since 2024, and it is seen as a test of investor confidence in a sovereign issuer under direct military bombardment, a rare occurrence in modern financial markets.
Historically, other GCC nations have issued debt during regional instability. For example, Saudi Arabia raised $2.6 billion in bonds in September 2019 after attacks on its Abqaiq oil facility. However, analysts note that Kuwait's current situation is more severe due to sustained kinetic attacks on a smaller, less diversified economy. Kuwait's last major bond sale in March 2024 was a $3.5 billion dual-tranche offering. The 5-year and 10-year notes were priced at spreads of 85 basis points and 120 basis points over US Treasuries, respectively.
The geopolitical premium on Kuwaiti debt is evident from its 5-year credit default swap (CDS) spread, which was quoted at 135 basis points on July 21. This compares to 95 basis points for Qatar and 110 basis points for Abu Dhabi. The yield on Kuwait's existing 2034 bond is now 120 basis points higher than Qatar's 2033 bond, up from approximately 70 basis points before the attacks began. Brent crude is trading at $88 per barrel, $7 above Kuwait's fiscal break-even oil price of $81 per barrel. The $2 billion target represents about 1.3% of Kuwait's projected 2026 GDP, and its public debt-to-GDP ratio is 24%, up from 18% in 2023. Citi, HSBC, and JPMorgan are the joint lead managers for the offering. The successful pricing of this bond will be a crucial indicator for the risk appetite towards the entire GCC debt market.
