GCC Weekly

Research evidence excerpt

GCC Weekly

Jun/26

maritime traffic through the Bab el-Mandeb Strait, the south- Source: IMF Portwatch, J.P. Morgan - Estimate based on MT data from IMF -

Data are based on AIS which likely result in an under-estimation of transit

ern gateway to the Red Sea. These concerns have now begun

to materialise.

Kuwait: Back to the Eurobond market

Recent developments suggest that the Houthis have imposed Francesco Arcangeli

a maritime blockade on Saudi vessels, including reported

attacks on two Saudi tankers in the southern Red Sea. The Kuwait returned to the international Eurobond market with a

Bab el-Mandeb corridor is a critical artery for both Saudi US$6bn three-tranche issuance, marking its first sovereign

exports and global oil markets, serving as a key outlet for issuance since the Iran conflict and only its second since

crude transported via the East-West Pipeline to the Red Sea 2017, following last year's successful re-entry enabled by the

port of Yanbu. passage of the new public debt law. Market reception was

constructive, with strong demand, allowing pricing to tighten

Evidence indicates that tanker traffic has started to reroute by roughly 25bp from initial guidance.

towards the northern exit through the Suez Canal. However,

this alternative presents significant logistical and cost chal- The strong investor appetite is notable given Kuwait’s elevat-

lenges. Fully laden Very Large Crude Carriers (VLCCs) are ed exposure to recent regional tensions, as the economy

unable to transit the Suez Canal and the majority of Saudi remains heavily reliant on hydrocarbon revenues and oil

crude exports are destined for Asian markets. As a result, exports flowing through the Strait of Hormuz. Nevertheless,