Kuwait issues $495m bonds for local banks

• New tranche designed to fund budget
• CBK issues three-year treasury bonds
• Total of nearly KD2.05bn since debt law

Kuwait has issued a new tranche of bonds for local banks with a value of KD150 million ($495 million), part of the Gulf state’s plan to borrow up to $100 billion over 50 years to fund its budget.

The Central Bank of Kuwait (CBK) issued the three-year treasury and Tawarruq (shariah-compliant) bonds at a rate of 3.6 percent on behalf of the finance ministry.

The bonds are the first to be issued in 2026 and the 12th tranche released since Kuwait relaunched its debt law in March 2025.

The issue brought to nearly KD2.05 billion the total dinar-denominated issuances by the CBK in the Kuwaiti market since the approval of the debt law.

The debt law aims to fund budget deficits and infrastructure projects in order to reduce dependency on the Gulf emirate’s massive financial reserves abroad.

Kuwait, one of the largest oil producers, has suffered from persistent budget deficits given its heavy reliance on unpredictable crude export earnings, despite longstanding plans to diversify sources of income.

Kuwait has forecast a deficit of KD6.3 billion in its 2025-26 fiscal year, based on an oil price of around $68 a barrel and a projected increase in non-oil revenues with the enforcement of new taxes.

In October last year, the emirate raised $11.25 billion from a three-part bond sale in global markets, drawing hefty investor demand for its first US dollar issue since 2017.

Kuwait sold $3.25 billion in a three-year portion at 40 basis points (bps) over US treasuries, $3 billion in a five-year tranche at 40 bps over the same benchmark and $5 billion in a 10-year portion at 50 bps.

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“CBK is expected to issue more bonds before the end of the current fiscal year… this is a good and safe investment for local banks,” said Ali Al-Anzi, manager of the Kuwaiti Al-Manakh economic consulting centre.

“Kuwaiti banks have sufficient liquidity, which keeps looking for more investment opportunities… hence the bonds issued last year were largely oversubscribed.”

Kuwait has been reluctant to withdraw from its overseas assets over the past few years. Before last year’s issuances, its last foray into the debt markets was in 2017 when it raised about KD2.5 billion in five- and 10-year eurobonds.