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Bahrain’s financial landscape is bracing for a further easing of monetary policy in 2026, following a year of significant rate adjustments and steady performance in the regional debt market.
A new report from Kamco Invest reveals that the Central Bank of Bahrain (CBB) is expected to implement a 50 basis point (bps) cut to interest rates next year, mirroring anticipated moves by the US Federal Reserve. This follows a total reduction of 75 bps in 2025, which brought Bahrain’s overnight repo rate to 3.65 per cent by December.
Despite global economic shifts, Bahrain maintains a stable sovereign credit profile according to major agencies. S&P Global Ratings and Moody’s both hold a “Stable” outlook for the kingdom with ratings of ‘B’ and ‘B2’ respectively, while Fitch maintains a ‘B+’ rating with a “Negative” outlook.
The kingdom’s commitment to fiscal management is further evidenced by its active participation in the fixed income market. While heavyweights like Saudi Arabia and Qatar saw a decline in total issuances during 2025, Bahrain was among the GCC nations that registered growth in its debt offerings. Over the next five years (2026-2030), Bahrain is projected to handle approximately $25 billion in bond and sukuk maturities.
The broader GCC fixed income market remained highly active in 2025, with aggregate issuances reaching $206.6bn, nearly matching the record levels of the previous year.
Saudi Arabia remained the region’s largest issuer at $82bn, despite an 18.3pc decline from 2024 levels.
Kuwait witnessed the most dramatic growth, with issuances soaring to $20.5bn compared to just $2.6bn in 2024, following the approval of its new debt law.
Qatar experienced a sharp 21.7pc decline in issuances, totalling $22.1bn for the year, whereas the UAE recorded marginal growth of 2.5pc, reaching $64.9bn.
The region faces a significant maturity wall, with $508.1bn in sovereign and corporate debt set to mature between 2026 and 2030. The financial services sector dominates these upcoming obligations, accounting for nearly 80pc of all corporate maturities.
Sustainability also took centre-stage in 2025, as green instrument issuances in the GCC jumped to $12.5bn. The UAE led this charge with $5.6bn in green offerings, followed closely by Saudi Arabia at $5.1bn.
Regionally, the outlook remains cautiously optimistic. While the US Fed’s “dot plot” suggests only one additional rate cut in 2026, market consensus points towards at least two. For the GCC, the expected decline in interest rates is anticipated to trigger a fresh wave of issuances early in the new year as governments and corporates look to lock in lower borrowing costs.
avinash@gdnmedia.bh
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