Kuwait city: Economists attributed strong global investor demand for Kuwait's first sovereign bond issuance in eight years, worth USD 11.25 billion, to five main factors, led by exceptional financial strength and structural reforms. Speaking to KUNA, they said the issuance was more than just deficit financing; it signaled to markets that Kuwait is activating its new public debt law, prompting strong investor confidence and heavy oversubscription.
According to Kuwait News Agency, Economic Society Secretary Mohammad Al-Jouan highlighted that the high demand stemmed from five key factors, including Kuwait's financial strength and its long absence from the markets since its last issuance in 2017. He pointed out that other reasons for the strong interest were Kuwait's robust credit ratings, attractive pricing, and the political message from its return to debt markets. This move aims to diversify Kuwait's investor base and reinforce fiscal reform.
Al-Jouan noted that Kuwait's USD 11.25 billion sovereign bonds attracted USD 28 billion in demand, with a 2.5 times oversubscription rate. This underscored the country's low public debt and substantial sovereign reserves managed by its investment bodies. Investors perceive Kuwait as a rare safe haven among emerging markets due to its low debt-to-GDP ratio and vast reserves.
He further mentioned that major credit agencies, Fitch, Standard and Poor's, and Moody's, maintained Kuwait's strong ratings with stable outlooks. This reinforced investor confidence and indicated low credit risk compared to regional peers. Kuwait's bonds were priced just 40 to 50 basis points over US Treasuries, offering high-rated, low-risk exposure with yields more attractive than many American and European government bonds.
The issuance's political message was significant, as it showcased the implementation of a new debt law and the reinforcement of financial tools, not just funding the deficit.
Dr. Yousef Al-Mutairi, a finance professor at Kuwait University, commented that the sovereign issuance aimed to ease pressure on the General Reserve Fund and finance delayed development projects crucial to GDP growth. This move helps Kuwait preserve sovereign wealth by investing reserve funds abroad for better returns than bond costs, avoiding excessive withdrawals that previously strained the fund.
Al-Mutairi explained that bond-based deficit financing is widely used globally and easier to manage than reserve withdrawals, especially amid lower interest rates worldwide. This reduces Kuwait's debt servicing burden. The three-tranche bonds (three, five, and 10 years) aligned with lower global rates, allowing Kuwait to borrow at reduced costs and better support public finance and long-term investments.
He added that the issuance helps withdraw excess liquidity from markets, reducing inflation and supporting the dinar's purchasing power, ultimately stimulating market activity and economic growth.
Former Islamic Development Bank Vice President Dr. Fouad Al-Omar stated that debt instruments like bonds help fund major development projects, engaging global banks and investors in Kuwait's economic growth. He emphasized the need to direct funds toward high-return projects that boost national economic growth, adding that the bond issuance helps develop a local debt market and financial sector.
In early October, the Finance Ministry issued USD 11.25 billion in sovereign bonds, marking Kuwait's first return to global debt markets since 2017 across three tranches of 3, 5, and 10 years. Acting Minister of Finance and Minister of State for Economic Affairs and Investment, Dr. Sabeeh Al-Mukhaizeem, remarked that strong demand and pricing reflect Kuwait's credibility as a sovereign issuer and will deepen global investor partnerships in line with Vision 2035.
The bonds were issued under Law 60 for the year 2025 on liquidity and financing, part of a broader reform package that includes new tax laws and private-sector-led housing and real estate legislation.