Bahrain, June 19 -- GCC fixed-income yields are benefitting from a decline in geopolitical risk premiums following the US-Iran deal, Fitch Ratings says. This is reflected in yield spreads between GCC investment-grade debt and US Treasury bonds having returned to pre-war levels. Spreads on speculative-grade GCC sukuk remain higher, reflecting a wider risk premium.

In absolute terms, GCC fixed-income yields fell from their March peaks but remain high, reflecting US Treasury rate volatilities to which GCC markets are closely correlated due to US dollar currency pegs. GCC sukuk continue to have lower yields than GCC bonds, on average, due to broader demand from Islamic banks.

The spread between GCC yields and US Treasuries indicates that ge...