Mubasher: The total value of bond issues across the GCC in the first five months of 2017 has reached around $22 billion in sovereign and corporate bonds year-to-date, Fisch Asset Management said Sunday.
The value of bonds in the six-member GCC registered between January and May has so far exceeded that of 2016 as a whole, the global leader in convertible and corporate bond strategies revealed.
In 2016, the total value of bond issues amounted to $21 billion, which was 74.6% higher than the $12.6 billion recorded in 2015.
“Current market conditions have created a favourable landscape for new bond issuances,” it added in a statement.
This year’s positive performance came on the back of “ongoing strong investor demand for emerging market assets,” driven by higher yield available compared to developed markets, as well as improved global economic growth.
“Many factors have contributed to this positive trend in 2017, for example, lower oil prices mean higher funding requirements, there is attractive pricing after markets have rallied, there is ample liquidity in the region and there has been a strong revival in credit markets on a year-to-date basis so far,” commented Philipp Good, Fisch Asset Management CEO.
The Sultanate of Oman is the “latest example” of a sovereign bond issuer making use of this positive environment after it successfully completed a $2 billion issue on 23 May, Good said, noting that the order book was three times oversubscribed.
“I view this as a huge success and a clear indicator of confidence throughout the region,” he added.
Meanwhile, in the Middle East, corporate debt enjoyed a solid performance since the start of the year, as investment-grade rated bond spreads dropped by 20 basis points (bps), significantly outperforming Asia, where spreads have seen a decline of only 4 bps.
“Other regions have seen a more pronounced narrowing of spreads, but this needs to be seen against the backdrop of Middle Eastern bonds already displaying the lowest spreads of all emerging markets regions at 170 bps,” Fisch said in a statement, noting that Asian spreads stand at 195 bps, while Latin American ones are the highest at around 250 bps.
“This development is a result of the inflows into emerging markets and reflects the comfort global investors have with the GCC region,” according to Fisch.
