Saudi to lead MENA region in sovereign commercial borrowing in 2019: S&P

Saudi Arabia is expected to be the largest sovereign borrower in 2019 in the MENA region accounting for $29 billion, or 22 percent of gross commercial long-term borrowing in the region as a whole, S&P Global Ratings said in its latest report on Sunday.

“We expect Saudi Arabia, Egypt, and Lebanon will issue the lion's share of long-term commercial government debt in the region in 2019 (respectively 22 percent, 20 percent, and 14 percent). We expect Iraq will continue to have the largest share of bi- and multilateral debt in 2018 (40 percent of the total),” S&P report added.

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Overall, for the 13 rated MENA sovereigns, S&P forecast a 25 percent or $27 billion increase in long-term borrowing from commercial sources (both domestic and international), to about $136 billion in 2019 compared with $109 billion in 2018.

This is chiefly because higher oil prices and fiscal consolidation measures in the GCC countries significantly reduced GCC sovereigns' funding needs in 2018, S&P said.

However, lower oil prices in 2019 will not support a further reduction in GCC fiscal deficits, S&P said adding that Kuwait, Egypt, and Iraq are expected to significantly increase their gross commercial long-term borrowing in 2019 compared with 2018.

S&P expects that about 44 percent of MENA sovereigns' $136 billion of gross borrowing this year will go toward refinancing maturing long-term debt, resulting in an estimated net borrowing requirement of $76 billion.