GCC

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...

Why GCC Corporates have shunned the Sukuk market

This article was first published in Islamic Finance news Volume 15 Issue 18 dated the 1st May 2018. The sukuk segment of the Islamic financial industry, witnessed a lot of activity in 2017. There was a global sale of nearly USD 100 bn in sukuk which increased the amount raised by 40% from 2016 as there was sustained growth in the GCC region along with the continuation in non-Islamic markets like U.K and Australia and entry by new markets like Nigeria....

Electric and Hybrid Vehicles – How soon can they disrupt in GCC?

Global demand for electric vehicles is expected to surge during the next few decades. The market was valued at almost USD 103bn in 2015 and expected to be close to USD 400bn by 2024. Sales are growing exponentially and have outpaced expectations, boosted by faster than anticipated battery improvements. World hybrid and electric vehicle (H/EV) sales is anticipated to more than double through 2018, reaching 25.6 million units and accounting for nearly 25% of all new motor vehicles sold. Considering...

Trade Wars – How will it play out for the GCC?

The fears of a trade war were looming large ever since Donald Trump took charge as the U.S president. In an attempt to revive domestic industries, the U.S president has decided to levy charges on imports of steel and aluminum, signaling a potential trade war. After taking nearly a decade to bring back the optimism to the world economy post-financial crisis, the development of a trade war could become a deterrent to global growth. Trade wars are an unfavorable outcome...

GCC SWFs Asset Allocation Strategies

The GCC SWFs are bestowed with the responsibility to preserve and grow the national wealth for the future generations and simultaneously, facilitate social development, economic diversification and enhancement of the domestic infrastructure. Based on these objectives the SWFs have been successful in devising and executing their investment strategy in the past. However, over the last few years, the regional SWFs have been operating under several challenges such as low interest rates, new normal oil prices, geopolitical shocks and beginning of...

Debt Management Offices in GCC – A great institutional step

GCC governments have been active in setting up Debt Management Offices (DMO) in order to better understand and service their debt obligations. Hitherto, the role of issuing debt, servicing them and repaying them were all taken care of by the respective central banks. While that might have worked when the debt were minimal, a specialist DMO is required in order to manage them by establishing a separate, independent entity that is in charge of the debt management to avoid the...

Is education still a good business in the GCC?

Challenges faced by GCC education industry Despite the growing government spending on education by gulf countries averaging 15.8% of government expenditure in GCC, the quality of education remain below par to global standards. It is reflected in high level of unemployment among youths with an unemployment rate as high as 27% (World Economic Forum). While Gulf governments may be eager to prioritize the hiring of nationals particularly in the private sector, a significant gap in skillsets and cultural and structural...

Is GCC a good place to hunt for yield?

Sizable issuances The emergence of GCC bond markets have been a fallout of the low oil prices and decline in foreign reserves, which has forced the regional governments to look for alternative routes to fund their diversification plans. Recently, debt issuances has been an important avenue for fund raising activities of the government. Out of the USD 38.5Bn that has been raised in the Middle East region since the beginning of 2017, 61% has come from the GCC countries. Saudi...

GCC Petrochemical Industry: Move beyond cheap feedstock

The main source of current GCC feedstock is ethane which, along with methane, is naturally found in associated gas. Other significant feedstocks includes propane and butane, both of which are derived from LPG. Lastly, there is naphtha, which is a product of crude oil refining. In contrast it is important to highlight that Naphtha’s contribution in Global feedstock consumption is around 70% in the year 2015, according to Platts. GCC has a significant cost advantage in feedstocks as compared to...

GCC bond market story-Just beginning to unfold

While the GCC equity markets came into prominence in the early part of the millennium the bond market took a back seat, primarily due to the lack of urgency to raise funds, ample liquidity in the system at low cost and certain cultural taboos. Family run organisations which control the majority of the economy were reluctant to expose their books to outsiders and sovereigns never had a dearth of capital. The data collated by Marmore clearly indicates an uptrend in...