Qatar’s debt capital market issuance is set to grow steadily and exceed $150 billion in the medium term, said Fitch Ratings in its latest report. Sukuk, ESG and Qatari riyal market penetration are on an upward trajectory, and the potential development of digital government bonds can support the market’s depth and sophistication.
However, the debt capital market continues to face several long-standing structural gaps.
Sukuk market share grows to 16.9 percent
Qatar is the third-largest debt capital market source among the GCC countries, with a 13 percent regional share outstanding as of April 2025. The market expanded by 8 percent to $131.8 billion outstanding, dominated by the sovereign at nearly 60 percent, followed by banks and corporates at 26 percent and 14 percent, respectively.
Fitch added that U.S. dollar issuance was minimal in April 2025, reflecting heightened global macroeconomic, financial-market volatility and uncertainties, on the back of the announced U.S. tariffs increase. Debt capital market issuance in April 2025 reached $9.6 billion, which was 36 percent lower than in April 2024.
The sukuk share of Qatar’s debt capital market rose to 16.9 percent outstanding, expanding rapidly by 68 percent annually to reach $22 billion outstanding at the end of April 2025. However, sukuk issuance during this period dropped by 86 percent, while bonds were down by 18 percent.
Fitch rates around 60 percent of Qatar’s dollar sukuk outstanding as of Q1 2025, all investment-grade and holding an ‘A’ rating with a Stable Outlook. No sukuk or bonds from Qatari entities had defaulted as of April 2025.
Qatar’s debt/GDP to rise to 49 percent of GDP by 2025
Fitch expects the government to refinance upcoming external market debt maturities and tap markets to cover a small budget surplus in 2025 under the assumption of a Brent oil price of D65/bbl, while banks and corporates are likely to continue to diversify funding sources.
“The government’s debt is below peers. We project debt/GDP to rise to about 49 percent of GDP by 2025 before falling to below 45 percent by 2027 as additional gas production volumes boost budget surpluses,” added the report.
Fitch also projects that the U.S. Federal Reserve interest rates will drop to 4.25 percent by the end of 2025, with Qatar Central Bank (QCB) likely to mirror this trend.
ESG debt emerges as key dollar funding tool
The report also revealed that about 67 percent of Qatar’s debt capital market outstanding was U.S. dollar-denominated and 28 percent riyal-denominated. About 90 percent of the sovereign’s bond issuance and all the sovereign’s bond sukuk issuance in 2024 were in riyal.
“Qatari riyal corporate sukuk also made its debut issuance in 2024. No banks issued riyal debt in 2024, though one bank issued sukuk in riyal during 4M25,” the report added.
Meanwhile, ESG debt is becoming a key dollar funding tool, at close to 30 percent of all dollar debt capital market issuance in 2024. In April 2025, QCB launched the Sustainable Finance Framework, covering both bonds and sukuk, though no ESG debt has been issued this year.
ESG debt capital market reached $4.1 billion by the end of April, up 204 percent annually, with a sukuk share at 18 percent. The QCB completed the infrastructure development for the CBDC in 2024 and will investigate digital government bond issuance.
“The lack of a link with international central securities depositories such as Euroclear or Clearstream partly hinders foreign-investor participation in the local-currency DCM. Private-sector issuance is limited, with most corporates preferring bank financing over bonds or sukuk. The riyal market remains nascent, and the investor base is concentrated with banks,” concluded the report.
