GCC issues $22 bln debt in 2017: Fisch

The GCC corporate and sovereign sukuk issuances rose to $22 billion in the first five months of this year thanks to the current favorable market conditions, Fisch Asset Management, a global leader in convertible and corporate bond strategies, said in a recent report.

Issuances in the first five months exceeded 2016’s total bonds worth $21 billion, which was also recorded a 74.6 percent increase when compared to $12.6 billion worth of debt in 2015.

The GCC corporate bond market showed solid performance in 2017, backed by ongoing strong investor demand for emerging market assets, due to the higher yield available compared to developed markets as well as upbeat global economic growth.

“Many factors have contributed to this positive trend in 2017, for example lower oil prices mean higher funding requirements, there is attractive pricing after markets have rallied, there is ample liquidity in the region and there has been a strong revival in credit markets on a year-to-date basis so far,” Philipp Good, chief executive at Fisch Asset Management, said.

Capitalizing on this positive environment, Oman has completed a $2 billion issue on May 23, with the order book three times oversubscribed.

In the Middle East, corporate debt also recorded strong performance this year. Spreads of investment-grade rated bonds have dropped by 20 basis points (bps), significantly outperforming Asia, where spreads have dropped only 4 bps.

The Middle East bonds have registered the lowest spreads of all emerging markets regions at 170 bps, when compared to other regions that have also seen lower spreads, thanks to the inflows into emerging markets and the comfort global investors have with the GCC region.

In Latin American, spreads were the highest at around 250 bps compared to Asian spreads at 195 bps.