25 September 2026
Chinese institutional holdings of Gulf debt climbed to almost USD 14 billion as of mid-2025, against USD 9.6 billion a year earlier, according to the latest International Monetary Fund figures reported on 25 September 2026. The UAE accounts for the largest single share at USD 7.8 billion, ahead of Qatar at USD 5.3 billion and Saudi Arabia at USD 657 million. Chinese positions in the region have grown ninefold since mid-2017, the earliest period the data cover, and Dubai bankers attribute the return to yield rather than to politics.
What the IMF data show
The headline number covers Chinese portfolio holdings of Gulf debt securities. Almost USD 14 billion at mid-2025 is an increase of more than 40 per cent in twelve months from the USD 9.6 billion recorded at mid-2024. Measured against mid-2017, the level is nine times higher.
The country split is uneven and worth reading closely. Of the mid-2025 total, USD 7.8 billion sat in UAE issuers, USD 5.3 billion in Qatar and USD 657 million in Saudi Arabia. The UAE and Qatar together account for more than 94 per cent of the recorded exposure, while Saudi Arabia, the region’s largest sovereign borrower by volume, holds a comparatively small share of Chinese portfolio money.
By tenor, about USD 7.5 billion was classified as short-term debt and USD 6.3 billion as long-term. That near-even split matches what dealers describe in the market: Chinese institutions concentrate on three to five year maturities and typically hold the paper to maturity rather than trade it.
Why Chinese institutions are buying Gulf paper
Ritesh Agarwal, head of debt capital markets at Emirates NBD Capital in Dubai, says Asian investors were active in Gulf bond markets until the Chinese real estate crisis began in 2021, and have come back steadily over the past 12 to 18 months. The share of Gulf bond issuance allocated to Asian accounts has been rising. It eased slightly during the Iran conflict, but on Agarwal’s account it was Asian asset managers and hedge funds that reduced activity, while Chinese banks kept investing.
Three factors are doing the work:
- Spread. Gulf bank bonds pay wider spreads than similarly rated Asian issuers, which improves risk-adjusted returns for a buyer with an investment-grade mandate.
- Scarcity. Highly rated emerging market debt is thin outside the Gulf, so funds mandated to invest beyond their home market have few comparable alternatives.
- Reallocation out of US Treasuries. Amol Shitole, head of fixed income at Mashreq Capital in Dubai, notes that China is reducing its US Treasury holdings while the Gulf is its main oil supplier, which makes similarly rated Gulf debt a logical partial replacement.
Shitole adds a concrete comparison. Abu Dhabi offers a higher yield than US government debt despite a comparable credit rating, runs what he describes as a more prudent fiscal policy, and sits on a substantially lower debt-to-GDP ratio. On that reading the emirate is the lower-risk instrument of the two for an Asian buyer.
What Chinese banks buy is narrow and consistent: primary issues from the Gulf’s top banks, sovereigns and government-related entities, investment grade only, with Saudi Arabia, the UAE and Qatar the preferred markets. Agarwal notes the buying continued through the conflict because pricing improved from an investor’s point of view and delivered additional return.
Chinese banks are now bookrunners, not only buyers
The second shift is structural. Cbonds rankings of Middle Eastern bond issuance bookrunners for January to August 2026 place Industrial and Commercial Bank of China 16th and Bank of China 18th, with Agricultural Bank of China, Shanghai Pudong Development Bank and CCB International joint 29th.
All five acted as bookrunners on Saudi Arabia’s USD 11.5 billion four-tranche sovereign bond sale in January 2026. Bank of China also served as a joint lead underwriter and worked on comparable Kuwaiti and Abu Dhabi issuances. Agarwal describes the logic without embellishment: Chinese banks bring their own internal demand, and as bookrunners they add liquidity pools from Asia on top of it.
What it means for the UAE debt market
The practical effect is a wider and more stable buyer base for UAE issuers. A hold-to-maturity investor behaves differently from a fast-money fund: the paper leaves the market, secondary volatility falls, and the issuer gets a more predictable order book on the next deal. For a market that has been growing its issuance volumes, that is a structural gain rather than a headline one.
A few points are worth holding on to:
- The exposure is concentrated in top-tier names. Chinese institutions buy leading banks, sovereigns and government-related entities, not the broad corporate market.
- It is an investment-grade story. Sub-investment-grade UAE paper is not part of this flow.
- Maturities are short to medium, three to five years, which matches the funding profile of bank issuers more than that of long-dated project finance.
- Bookrunner participation is the newer development. A Chinese bank on the syndicate changes who gets shown the deal, not only who buys it.
- The IMF figures are as of mid-2025 and are the latest available. Market activity through 2026 is described by dealers, not yet captured in the official series.
How Atlant Capital can help
Deeper capital ties between China and the UAE show up first in the banking layer: more Chinese corporate presence in the Emirates, more cross-border settlement, more scrutiny of who is on the other side of a transaction. Companies operating between the two markets feel that at the account level long before they feel it in bond spreads.
Atlant Capital works on the part of that chain a business actually has to handle. We advise on company setup in the UAE, mainland or free zone, including the activity structure a trading or investment company needs. We handle corporate bank account opening, where compliance questions about ownership, source of funds and counterparty geography decide the outcome. If you want the full procedure before you start, our guide to opening a bank account in the UAE sets out the documents, the timelines and the points at which applications usually stall.
Conclusion
The figures describe a return, not a debut. Chinese money was in Gulf bond markets before 2021, left during the domestic property crisis, and has been rebuilding since. What is different this time is the position in the chain: the same institutions that buy the paper are increasingly arranging it. For the UAE, which holds USD 7.8 billion of the USD 14 billion regional total, that means a buyer base that is both larger and better connected to the primary market than it was a year ago.
Source: AGBI.
FAQ
How much Gulf debt do Chinese investors hold?
Almost USD 14 billion as of mid-2025, according to the latest IMF figures, up from USD 9.6 billion a year earlier. The level is nine times higher than at mid-2017. About USD 7.5 billion of the total was short-term debt and USD 6.3 billion long-term.
How much of that is UAE debt?
USD 7.8 billion, the largest single country share. Qatar accounted for USD 5.3 billion and Saudi Arabia for USD 657 million. The UAE and Qatar together make up more than 94 per cent of recorded Chinese holdings of Gulf debt.
What kind of bonds do Chinese institutions buy in the Gulf?
Investment-grade primary issues from the region’s largest banks, sovereigns and government-related entities, with Saudi Arabia, the UAE and Qatar as preferred markets. Tenors are typically three to five years and the paper is usually held to maturity rather than traded.
Why are Chinese investors moving into Gulf debt now?
Yield. Gulf bank bonds pay wider spreads than similarly rated Asian issuers, highly rated emerging market debt is scarce outside the region, and China is reducing its US Treasury holdings. Bankers at Emirates NBD Capital and Mashreq Capital point to Abu Dhabi paying more than US government debt at a comparable rating and a lower debt-to-GDP ratio.
