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GCC bond, sukuk issuances rises to $97.7 billion: Markaz

Issac John (issacjohn@khaleejtimes.com) / 14 April 2014

Corporate, sovereign bonds issued by GCC was $241.8 billion

The primary issuance of bonds and sukuks in the GCC surged to 14.5 per cent to $97.7 billion in 2013, underscoring resurgence in the regional debt market.

The total amount outstanding of corporate and sovereign bonds issued by GCC entities as of 31 December 2013  was $241.8 billion, Kuwait Financial Centre, or Markaz, said in a research report.  

Corporate issuances accounted for the majority of the total amount outstanding with $177.4 billion, or 73.4 per cent of the total amount. Sovereign issuances amounted to $64.39 billion or 26.6 per cent of the total. Of the amount outstanding, the UAE entities issued bonds and sukuks worth $116.7 billion, or 48.3 per cent, Markaz said.

A brighter macroeconomic outlook, adequate liquidity and a strong local investor base have been driving the GCC bond market which is set for an upswing in 2014, experts from Crédit Agricole Private Banking said recently. The UAE is the largest sukuk  issuer in Mena with 76 issues worth $49.46 billion followed by Saudi Arabia totalling 70 sukuks of $46.5 billion while Qatar ranked third with 24 issues of $23.79 billion, according to Credit Agricole.  Mena accounts for 30 per cent of outstanding global sukuk market with $80 billion compared to $270 billion globally. During the last five years, sukuk value and volume witnessed upward trend but plunged in 2013.

Markaz report titled “GCC Bonds & Sukuk Market Survey” said in terms of issuance frequency March, 2013 predominated with 44 issuances; however, October witnessed the highest value as $13.5 billion was issued, representing 13.8 per cent of the total amount issued, through 29 issuances.

The central banks of Kuwait, Bahrain, Qatar, and Oman raised a total of $51.5 billion during 2013 through Central Bank Local Issuances, or CBLI, debt securities issued by GCC central banks in local currencies and maturities of less than one year  to regulate the levels of domestic liquidity. The Central Bank of Kuwait raised the highest amount of $25.4 billion, representing 49.3 per cent of the total CBLI amount through 66 issuances. The Central Bank of Qatar raised a total of $16.20 billion, a considerable increase of 172.55 per cent from $5.94 billion raised in 2012. According to Markaz, a total of $46.1 billion was raised by sovereign and corporate bond and sukuk issuances in 2013, an increase of 2.3 per cent from the total value raised in 2012.

Issuances by the UAE entities raised the largest amount in 2013 representing 41.4 per cent of the total amount, or $18.8 billion, and were the most active in terms of issuance frequency with 111 issuances representing 67.8 per cent of the total number of issuances. Saudi Arabian entities raised the second highest amount during 2013, $17.2 billion while Qatari entities raised $6.7 billion. From Kuwait, United Real Estate Company was the sole corporate issuer which issued a five-year bond with fixed and floating tranches, raising a total of $210 million.

During 2013, corporate issuances dominated the majority of the amount raised, with $42.9 billion or 93.0 per cent of the total amount raised. Sovereign issuances raised $3.3 billion representing 7.0 per cent of the total amount through four issuances compared to $6.7 billion raised in 2012 through 8 issuances.

Three of the four sovereign issuances were from UAE while the fourth one was from Bahrain. Saudi Arabian corporate entities were the leading corporate issuers in GCC during 2013 in terms of value, raising  $17.2 billion through 22 issues.

The UAE was close behind, raising a total of $17.1 billion and continuing to dominate the market in terms of number of issuances with 108 issues.

Conventional issuances raised $23.7 billion, or 51.4 per cent of the total amount raised in GCC bonds and sukuk market during 2013. This was an increase of 2.5 per cent as compared to 2012. Conventional issuances slightly surpassed the value raised by sukuk which totaled $22.3 billion in 2013.

Markaz report said the Financial Services entities accounted for the largest amount raised during the year, with $19.8 billion representing 42.9 per cent of the total amount raised, through 122 issuances. The Government sector accounted for the second largest amount with $7.3 billion through five new issues.


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