GCC bond, sukuk issuances to rise in 2019: S&P

GCC bond and sukuk issuances will pick up strongly in the remainder of 2019 despite staying low in the first quarter at $1.1 billion, S&P said in a recent report.

The two issuances included Saudi food producer Almarai’s $500 million sukuk and Bahrain's sovereign wealth fund Mumtalakat’s $600 million sukuk.

“This situation is likely to change in the coming days and months, with the likes of Saudi Aramco and Saudi Telecom lining up to tap the international capital markets,” the report said.

Last week, state-owned Saudi Aramco announced plans to raise $10 billion.

With average yields on GCC bonds and sukuk having fallen in recent weeks to levels not seen since 2017, issuers see an opportunity to lock in lower rates on long-term borrowing, the report noted.

Despite the negative capital market backdrop, S&P continues to see interest in ratings from issuers in new sectors such as health care, education, and consumer goods.

“Given the GCC corporate borrowers' ongoing efforts to reduce their traditionally high dependence on short-term bank funding by diversifying their funding sources and extending their debt profiles, we expect to continue to see strong interest in issuer credit ratings in the rest of 2019 and beyond,” the report said.