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GCC bond, sukuk 
values dip 32% in H1

(Issac John) / 3 August 2010

DUBAI - The value of GCC bonds and sukuks issued during the first half of 2010 dropped by 32 per cent to $24.2 billion compared to the same 2009 period, Kuwait Financial Centre said
 on Monday.

In the first half, sovereign/government issuances accounted for 71 per cent of the amount raised at $17.2 billion, Kuwait Financial Centre, or Markaz, said in its market review.

The dominance of sovereign issue was in line with the “trend since 2003 except for the peak years of 2006-2007 and 2008, when corporate issuances dominated the market,” it said.

April was the busiest month in terms of issuance frequency and value, with 17 issuances raising a total of $6.1 billion, accounting for 25.1 per cent the total first half issuances value.

In line with the tradition since 2003, conventional bonds accounted for the bulk of the amount raised during the first six months of 2010 at $20.1 billion through 68 issues — five times the total value of sukuks issued during the same period.

Markaz said among non- sovereign/government issues, four sectors were active during the first half. These include the financial services sector which issued the most number of bonds and raised the largest amount at $3.3 billion through eight issuances, followed by the power and utilities sector $2.9 billion through two issuances, the real estate sector at $0.6 million through three issuances, and the oil and gas sector at $ 0.3 million through one issuance.

Kuwait came first by issuing 31 bonds valued at  $10.8 billion, representing 44.7 per cent of the total recorded in the GCC. Central Bank of Kuwait accounted for most of that.  Saudi Arabia was second at $4.2 billion raised through five issuances, Markaz report said.

“However, in terms of frequency, Bahrain was the most active, issuing 37 bonds and sukuk representing 45.1 per cent of the total number of issuances and raising $2 billion,” said the report by the investment firm, which has total assets under management of over $3.19 billion.

The Kuwaiti dinar-denominated issuances raised $10.8 billion. The US dollar-denominated issuances raised $4.9 billion through six issuances, followed by the Qatari riyal denominated issuances at $3.3 billion while the Saudi riyal-denominated issuances raised $3.1 billion. While the Bahraini dinar denominated issuances were the most active, representing 42.7 per cent of the total issuances.

Total bond issuances during the period had tenors ranging from three months to 20-year. Thirty-eight issuances with three-month maturities raised  $6.7 billion, representing 27.6 per cent of the total amount raised. The five-year maturity issuances raised the second largest amount with $5.2 billion, through eight issuances.

The bond and sukuk issuances during the period had sizes ranging from $4.0 million to $1.9 billion.  Issuances with a principal amount of $100 million or less were the most active with 39 issuances, while issuances with a principal value of more than $500 million and less than $1 billion raised the highest amount $7.8 billion, or 32.0 per cent of the total raised through 12 issues.

The Saudi Electricity Company’s sukuk maturing in 2030 was the largest corporate issuance in the first half, raising a total of $1.9 billion.

 issacjohn@khaleejtimes.com

 
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