Gulf Cooperation Council (GCC) banks have made a notable return to the capital markets during the second quarter of 2026, shaking off a two-month period of inactivity triggered by regional geopolitical instability. After a cautious start to the spring, when uncertainty regarding the Iran conflict and the Strait of Hormuz led investors to prioritize capital preservation, market sentiment has noticeably improved. Driven by government backing and robust institutional fundamentals, GCC lenders raised $3.58 billion between May and June, signaling a steady recovery despite total volumes trailing behind the $5.53 billion recorded in the first quarter.

The UAE banking sector emerged as the primary catalyst for this rebound, accounting for five of the eight major transactions completed during the quarter. Institutions such as Emirates NBD and First Abu Dhabi Bank (FAB) successfully navigated market volatility, with the latter utilizing both green bonds and senior debt to tap into renewed investor appetite. Simultaneously, Islamic finance remained a cornerstone of regional activity, with significant sukuk issuances from Dubai Islamic Bank and others demonstrating strong demand for Shariah-compliant products. While regional sukuk activity faced a slight dip in the first half of the year, global trends remain positive, with experts anticipating continued growth through the remainder of 2026.