Mideast debt issuance to exceed $20 bln in Q4: Fisch

Debt issuances in the Middle East are expected to exceed $20 billion for the remainder of 2017, backed by favorable market conditions, Fisch Asset Management said in a new report.

“There are many contributing factors to the success of Q4 2017, including synchronized global growth and a low interest environment that is beneficial for emerging markets and political stability,” the report said.

Saudi Arabia and Bahrain are likely to issue a dollar-denominated sovereign deal before the end of this year.

The United Arab Emirates (UAE) and Kuwait are well positioned to benefit from current conditions and launch new offerings, provided there is a pull factor from investors. 

Oman is anticipated to confirm new issues, depending on the size of deficits.

Meanwhile, Qatar will weather the ongoing economic blockade by fellow Arab countries and continue to grow in 2018 and 2019, the report said. The state is likely to monetize some other assets, such as the stake in Credit Suisse and avoid unnecessary risks amid the current embargo.

“The new issues season kicked off again on Aug. 28 with roadshows and with the Sep. 4 US holiday. Very important to this season are some pre-funding of maturities of 2018 bonds, including: Mubadala (IPIC 2018 bond), Taqa, Aldar and Sabic. All those companies and more can benefit from great market conditions by pre-funding those maturities early,” said Philipp Good, chief executive of Fisch Asset Management.

Government related entities (GREs) will also unveil some new issues, which are characterized by Investment Grade ratings. They will benefit from cheap funding and extend their duration in the bond market.

Saudi banks will be patient as they have larger deposits domestically.

Further, Saudi Telecom Co. (STC), the Kingdom’s largest mobile operator, could be a well-received corporate entity tapping the debt market this year, the report added.