Bonds

Most ESG Indices are positive in October; ESG Instruments in GCC oversubscribed

ESG is no longer driven by altruism. As we can see from the table, ESG index has mostly outperformed its parent index in countries like US, Japan and Canada. These attractive returns are luring investors towards instruments and institutions having higher ESG scores. One reason could be that higher ESG rated companies tend to perform well in the long term on account of better governance and are more sustainable. ESG Indices - Performance Source: Refinitiv Not only equities, the issue...

Deluge of bond issues by Gulf banks provides capital boost

GCC banks continue to tap the bond markets at a brisk pace in 2021 as they try to take advantage of low interest rates amid prospects of economic recovery. The impact of COVID-19 on earnings have spurred banks to raise capital through bonds to strengthen their balance sheets. Banks also needed to issue new bonds to pay off the ones maturing this year. UAE’s Emirates NBD bank had the first public debt issuance in GCC this year with a USD...

Revenue squeeze could spur Gulf bond issuance to new highs in 2021

International debt sales by sovereigns and corporates in the Gulf region topped a record USD 100billion issuance in 2020 as governments raised capital to cover their widening deficits and corporates latched upon the opportunity to strengthen their balance sheets amid low interest rates. Central banks opened up the liquidity taps to support the economy and investor frenzy for positive yielding instruments drove international debt issuance from the gulf region to record highs. Exhibit: GCC borrowings topped USD 100billion in 2020...

Flurry of Bond issuances – How are GCC countries placed?

The year 2020 has seen bond issuances totaling USD 42billion so far by GCC governments as they try to raise funds in the market to plug record deficits due to the oil price crash and the COVID-19 crisis. GCC Sovereign yields have come down since the market selloff in March at the height of the crisis. As on October 6, 10-year yields for Kuwait Government bonds stands at 1.48% (a fall from 2.37%, 2020-start) while that of Saudi Arabia, Abu...

GCC Governments should tap the idea of perpetual bonds

Spain proposed an interesting financing mechanism, though not unprecedented, to fund the recovery measures against COVID-19 pandemic impact by issuing bonds without maturity date. The bond, popularly known as ‘perpetual’, has no set date for redemption and the government pays coupon until it decides to buy the bond back. The idea resonated well among many as it could offer and easy and low-cost way to finance the proposed amount of EUR 1 trillion (USD 1.08 trillion). Based on various estimates,...

GCC Bond issuances witness an uptick in H1 2019

Bond markets in the GCC witnessed a pick-up in debt issuances during the first half of 2019 after a subdued close in the last two quarters of 2018. The rise in oil prices during the first nine months of 2018 boosted the oil revenues for GCC economies, reducing the need to tap the bond markets. Consequently, Sovereign issuances dried up in the second half of 2018. Since the start of 2015 (As of 23rd Sep 2019), the UAE and Saudi...

Saudi Aramco $12 billion bond issuance: Another big feather

Saudi Arabian Oil Company (Saudi Aramco) raised USD 12 Billion with the help of its first ever-international bond issuance in the month of April. Aramco marketed a U.S. dollar-denominated debt issue split into five tranches with maturities ranging from three to thirty years. The bond received overwhelming demand from investors, as the company recorded orders of over USD 100 Billion. Demand for the bond was the largest ever recorded for any emerging market bond, surpassing order book value of more...

Brutal October – $5 trillion wealth wiped away from global equity and bond markets

According to our recently released Monthly Market Review for the month of October, GCC equity markets remained flat thanks to Qatar’s positive performance, while global equity and bond markets shed nearly USD 5 trillion in wealth during the period. Qatar was the best performing GCC market during the month, gaining 5.0% despite the ongoing selloff in emerging market equities. Qatar’s main equity index was also the only main GCC equity index to witness positive returns for October. Kuwait extended its...

GCC’s inclusion in J.P. Morgan’s EM Bond Index: The “Hurray” Moment

J.P. Morgan has recently said that Saudi Arabia, UAE, Bahrain, Kuwait and Qatar sovereign bonds would be added to its Emerging Market Bond Index (EMBI) from January 2019, a decision that can potentially bring up to USD 60 billion of active and passive inflows, according to analysts. In order to qualify for index membership, the maturity of the debt should be greater than one year with a minimum face value of USD 500 million. Low correlation of GCC bonds seen...

What’s fuelling appetite for Gulf bond issues?

This article was originally published in Argaam The bond market in the GCC region saw bond issuances to the tune of USD 70 bn, an all-time high issued amount in the year 2017 (https://www.thenational.ae/business/markets/strong-appetite-for-gcc-credit-forecast-for-2018-1.699843) The first quarter of 2018 has already seen issuances worth USD 16.8 bn, mostly by Oman (39% approx.) and Qatar National Bank (22% approx.). Oman has managed to sell its largest ever sovereign bond worth USD 6.5 bn in face of multiple downgrades in credit ratings...