JEDDAH – Gulf Cooperation Council member countries issued bonds worth around $20.9 billion in the first nine months of 2011, slightly lower than their value in the same period of 2010, the National Commercial Bank (NCB) said in a study.
"Total GCC bond issuance during the first nine months of this year reached $20.9 billion, as compared to $21.5 billion in the same period a year earlier," the study said.
The total volume of issuance reached a mere $157.3 million, the report said, adding that the value represents a sharp drop from $3.4 billion in 2Q11 and $9.6 billion in 3Q10.
"Overall GCC sukuk issuance during the quarter reached $3,190.1 million compared to $2,398.0 million the previous quarter and only $361.7 million in 3Q10."
"Even though the general mood of the sukuk market has turned very positive, new mainstream primary activity (closed issuances) in the Gulf was still limited to four corporate issuances with an aggregate value of just under $1.6 billion, not an impressive figure by historical standards but more than 10 times the total conventional issuance seen during the quarter," it said.
The third quarter of 2011 offered growing indications of increasingly positive momentum in the sukuk markets, both regionally and especially on a global scale.
"By the end of the quarter, global sukuk issuance (YTD) had already beaten all previous records.
A growing number of investors now seem to view quality sukuk as a safe haven at a time of global economic uncertainty," the report noted.
"The slowdown became particularly pronounced in Q3 and a number of regional issuers, even ones with fairly advanced plans, decided to cancel or delay their issuances in the face of considerable market nervousness."
Q3 saw only four conventional issuances by two names, HSBC Bank Middle East and National Bank of Abu Dhabi, making this one of the weakest quarters for the regional bond market in recent history, the study said.
"The UAE was the only active primary market and financial services the only sector represented," the report noted.
Meanwhile, Saudi Arabia awarded a total SR179.5 billion ($48 billion) of contracts in the first nine months of the year compared with SR106.8 billion last year, NCB also said.
The value of contracts awarded during the third quarter reached SR95.1 billion, which shows that “the government continues to place an overwhelming emphasis on capital expenditures to meet its commitment to improve the kingdom’s physical and social infrastructure capabilities,” it added. – SG