The Iran war is spurring record borrowing by Gulf states looking to harden their infrastructure and build trade routes that do not rely on the Strait of Hormuz. Countries including the UAE and Saudi Arabia are weighing billions in spending on new or expanded ports on the Red Sea and Gulf of Oman, along with oil pipelines and upgraded desert roads.
Regional bond sales have reached $112 billion so far this year, a record level according to Bloomberg, and government funding teams have sounded out banks about borrowing more.
With the region’s trillions of dollars in sovereign wealth assets and large foreign exchange reserves, most Gulf states make for creditworthy borrowers. Demand is strong: Kuwait’s $6 billion sale earlier in July was more than twice oversubscribed, although the cost of borrowing was notably higher than prewar issuances.
