Mubasher TV
Contact Us Advertising   العربية

MENA likely to issue above $80bn debt notes in 2019 - Report

MENA likely to issue above $80bn debt notes in 2019 - Report
Foreign-currency bonds and sukuk sales in MENA stood at $84 billion in 2018

Mubasher: The Middle East and North Africa (MENA) region is expected to see as much as $80 billion in hard currency-denominated bonds and sukuk issues this year, according to a white paper co-authored by Emirates NBD Asset Management, KAMCO Investment Company and Fisch Asset Management.

Foreign-currency bonds and sukuk sales in MENA stood at $84 billion in 2018, with a growing demand for new debt issues as regional debt was oversubscribed by 2x -2.5x, the paper entitled “MENA debt: an evolving world for fixed income investors” found.

Demand is expected to remain high in 2019 as GCC bonds are included in the JP Morgan EMBI index series, it said

Since the beginning of 2019, the GCC countries have delivered $9.1 billion in bond and sukuk issuance from both sovereigns and corporates, including the Saudi sovereign, First Abu Dhabi Bank (Sukuk) and Dubai Islamic Bank (AT1), it added.

State-run Saudi Aramco is also expected to issue debt notes in the second quarter of 2019 to finance the acquisition of its stake in the Saudi Basic Industries Corp (SABIC).

Regional gross government debt surged from 29.7% of gross domestic product (GDP) in 2014 to 44.4% in 2018, after a series of issuances, KAMCO Investment Company’s head of investment research said. 

“Fiscal deficits for most MENA countries have been the reason for an increase in government debt, and this trend is expected to continue in 2019,” Faisal Hasan explained.

In 2018, GCC fixed income secured a safe haven during a sustained emerging market sell-off period, the CFA, director Fixed Income at Emirates NBD Asset Management highlighted.

As for this year, Parth Kikani said that “risks are more balanced” as investors will need to be more conscious in credit selection.

“While risks stem from further oil price volatility, increased issuance and geopolitical uncertainty, investors may benefit from attractive risk premiums, improving fundamentals and the benefits of index inclusion leading to efficient price discovery,” he added.

For his part, Philipp Good, CEO and Head of Portfolio Management at Fisch Asset Management, said, “Until a new equilibrium in the [US] rate market is found, emerging markets remain attractive alternatives for allocation, with GCC countries among the most appealing of all. Most countries are pushing their reform agendas, and the balancing of the pace of reform will be one of the key drivers for stability in the region.”