ALMATY, Kazakhstan, March 02, 2026 (GLOBE NEWSWIRE) -- Teniz Capital Investment Banking, the Kazakh-Abu Dhabi investment bank, published today an urgent Debt Markets Report concluding that Islamic bonds — or sukuk — are consolidating as a safe-haven asset for regional investors amid the repricing of geopolitical risk triggered by the military escalation in Iran, with the current correction opening a selective entry window in GCC debt with potential returns of 4–7% over the next 6–12 months.
The escalation around Iran at the start of 2026 has led to a repricing of geopolitical risk across regional debt. Sovereign 10-year yields have risen 3–30 basis points year-to-date, with GCC averages at 4.2–4.7% and spreads to U.S. Treasuries widening 4–30 bps.
Regional credit default swaps have increased 8–25%, though Saudi Arabia's 5-year CDS at approximately 71 bps remains well below the emerging markets average of 150 bps. The market prices a 20–30% probability of a prolonged conflict with oil supply disruptions through the Strait of Hormuz.
Under its base-case scenario, assigned a 60–70% probability, the report envisions a controlled escalation without regime change or defaults. The current correction opens a selective entry window with potential total returns of 4–7% over 6–12 months in long-duration GCC sukuk and Israeli bonds.
This outlook is underpinned by strong fundamentals: 84% of regional sovereign issuances carry investment-grade ratings, Brent crude at $70–73 sits above fiscal breakeven levels of $57–82, and the non-oil share of GCC GDP at 70–75% reduces external shock sensitivity.
Global sukuk issuance reached a record $150–160 billion in 2025, up 20–25% year-over-year, with sustainable sukuk growing 44% to $11.4 billion. Issuance for 2026 is projected at $170–180 billion.
Investment-grade instruments account for 82–85% of the sukuk market, and year-to-date total returns of 1–2% have outperformed the broader emerging market debt universe. Spreads to conventional bonds narrowed 2–5 bps, reflecting demand from Islamic financial institutions and crossover investors.
The report attributes sukuk resilience to asset-backed structures, a stable institutional investor base comprising 40–50% of placements, and their growing role as high-quality collateral in GCC banking systems, where repo operations rose 15% year-over-year.
Short-term outlook (0–3 months):
The base scenario (50% probability) foresees limited strikes, with yields rising 5–10 bps and spreads widening 4–8 bps. The recommendation is defensive positioning: short-duration GCC exposure of 3–5 years with 2–3% carry, CDS hedging on Iraq and Lebanon, and zero exposure to Iran. Expected portfolio volatility: 5–10%.
In a de-escalation scenario (20% probability), conditions favor building long positions in UAE and Qatar sukuk. Should the conflict become protracted (30%), the report recommends rotating into Treasuries and collateralized positions while cutting peripheral credits.
Medium-term outlook (6–12 months):
The base scenario (40% probability) points to stabilization and yield normalization of -5 to -10 bps. The recommendation is to increase GCC sukuk exposure to a target allocation of 20–30%, with a focus on green formats offering 5–7% potential supported by ESG flows. Israeli bonds serve as a diversification element. Target total return: 4–6%.
If the conflict is resolved (30% probability), spreads could compress 10–15 bps, creating room to scale into high-yield Iraqi bonds. If tensions persist (30%), the recommendation is to underweight the region and diversify into Asian sukuk to partially decorrelate.
The report does not issue a buy recommendation. Rather, it concludes that the current correction creates a selective entry window, with a preference for investment-grade GCC sukuk at short duration in the near term, and a gradual migration toward green sukuk over the medium term, always with active CDS hedging.
About Teniz Capital
Teniz Capital Investment Bank is a Kazakh investment bank established in 1997, with offices in Almaty and Astana's AIFC, and a strong presence in Abu Dhabi. The firm manages a team of over 100 professionals and focuses on cross-border transactions, specializing in infrastructure, energy, and technology deals.
In 2025, Teniz Capital acted as local bookrunner for Eurobond issuances of the Ministry of Finance of the Republic of Kazakhstan and National Managing Holding "Baiterek" JSC, working alongside J.P. Morgan, Société Générale, Standard Chartered Bank, Alatau City Invest JSC, and Halyk Finance JSC, as well as for supranational institutions such as the Black Sea Trade and Development Bank.
The entity has participated in transactions with financial institutions and quasi-sovereign corporates, including NC "Food Contract Corporation" JSC, Kazakhstan Sustainability Fund JSC, Home Credit Bank JSC, Bank RBK, and AIFN Retam JSC. It has further provided funding solutions to BI Group, Sensata Holding, Jet Group, Capital Leasing Group, Kisamos Shipping DMCC, and ABR Restaurants.
The shareholders of the AIX are AIFC, the Shanghai Stock Exchange, the Silk Road Fund, and NASDAQ, which developed the AIX trading platform. The exchange is regulated under a framework based on English Law.
SAFE HARBOR STATEMENT
This press release and the research report referenced herein are provided for informational purposes only and do not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States or any other jurisdiction where such offer or solicitation would be unlawful. This analysis does not constitute investment advice, a personal recommendation, or an invitation to buy or sell any financial instrument. Investors should conduct independent research and consult qualified financial, legal, and tax advisors before making any investment. This material is not intended for distribution to, or use by, any person or entity in the United States or to U.S. persons. Teniz Capital and/or its affiliates may have positions in securities mentioned herein. Past performance is not indicative of future results.
For further information, members of the media can contact teniz@definition.city
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