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GCC’s debt capital market stays healthy

Last updated: Thursday, February 28, 2013 1:09 AM


JEDDAH – The GCC debt capital market should score another positive year this year as fundamentals favoring the market are expected to continue, said Sameh Al Qubaisi, General Manager of Corporate Coverage Group at National Bank of Abu Dhabi’s (NBAD) Global Financial Markets.

Speaking at the 2013 Global Financial Markets Forum (GFMF) in Abu Dhabi Wednesday, he said “2012 was a stellar year for capital debt markets and we expect a continued growth and maturing of this sector which will fuel accelerated growth across the economy.”

Issuances in the first month and half of 2013 has surpassed $3 billion (AED11 billion), with a number of issuers looking closely to tapping the market at the right window of opportunity. Volatility in credit spreads in the mature markets will continue to attract fixed income investors to markets in GCC.

GCC’s capital markets marked a record year as issuance reached nearly $42 billion (AED154 billion) in 2012 up from $27 billion in 2011. GCC’s attractiveness for investors, relatively low interest rates and investors’ robust liquidity helped the market achieve a record year. It is expected that the amount would be around the same figure this year.

“The region experienced an increased direct capital inflow as investors shifted to investment in GCC paper,” said Fawaz Abusneineh, the Head of Debt Capital Markets at NBAD. “GCC notes also offer a premium over similarly rated European and North American issues and this has helped attract fixed income investors to this region.”

During 2012, nearly half of all GCC capital market debt was issued by UAE entities. The National Bank of Abu Dhabi’s (NBAD) Capital Debt Markets Group increased the number of transactions executed by around five times during the year.

Of the total 51 issues last year, 25 were bonds and sukuk issued by UAE companies, 11 in Saudi Arabia, 9 in Qatar, 3 each in Bahrain and Kuwait.
“UAE is crucial to the development of this market and we will see it becoming the center of the debt market of the region,” Al Qubaisi further said.

Twenty-six of the issues were sukuk. The largest note, sukuk issued by the government of Qatar, holds a face value of $4 billion. Issuers from the UAE included NBAD, Dolphin Energy, Abu Dhabi National Energy (Taqa), IPIC, Emaar, First Gulf Bank, Emirates NBD, and Abu Dhabi Islamic Bank.

Sultan Bin Nasser Al Suwaidi, the Governor of the Central Bank of the UAE, highlighted the “benefits of establishing local debt market in the UAE.
He said a “domestic bond market would empower UAE companies to raise fund domestically and rely less on international markets. He also said as Basel II and III would require higher reserves, it would be critical to grow the domestic bond and sukuk market to empower UAE banks to raise money by issuing debt notes.”

Sheikh Nahayan Mabarak Al Nahayan, UAE Minister of Higher Education and Scientific Research, said “we have an open and fast growing economy, it is an economy that encourages competiveness, innovation and balances preserving our heritage in this global world.”

The UAE cooperates with all nations, and that UAE’s growth is “creating opportunities for all,” he added. — SG/QJM

 
   
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