Bond issues from the region have been ramping up as governments seek to diversify their sources of funding away from a reliance on oil revenues.

Until now, the vast majority of those issues have happened in U.S. dollars, but Societe Generale has held discussions with the Gulf Cooperation Council governments about possible issues in euros, the second largest bond market after dollars.

"Governments have to think about diversifying their funding sources in a context where all sovereigns of the region will probably have to tap the international bond markets on a regular basis," said Richad Soundardjee, Societe Generale's chief executive in the Middle East. "Hence beyond dollars, euro is natural option to look at."

Egypt will start meeting bond investors in Europe this week ahead of its first potential euro-denominated bond issue, Reuters reported earlier this week, citing a document from one of the banks appointed to arrange the meetings.

Societe Generale is not involved in arranging the Egypt issue but so far this year it was a joint book runner on a 1.7 billion euro-denominated bond issue by Ivory Coast and Senegal's 1 billion euro paper.

"The more Europe strengthens its position as a trade and investment partner for the GCC, the more compelling the opportunities for a euro-denominated bond become," said Amine Jaoui, head of public sector coverage for the Middle East.

With all the right factors converging, it is likely a euro-denominated bond issue could be sold by a Gulf sovereign within the next 12 to 18 months, he said.

(Additional reporting by Davide Barbuscia; Editing by Mark Heinrich)

By Tom Arnold