Bond issues in the Middle East and North Africa region this year are expected to match or exceed last year's level of $40 billion (Dh146 billion), said a senior Deutsche Bank executive Tuesday.
"Year-to-date we have seen bond issues worth $10 billion from the Mena region. There has been a temporary halt in the issuance from the region during the past few months due to the political uncertainties linked to the Arab Spring. We expect to see many of these issuers coming to the markets before the end of the year," said Salman Al Khalifa, managing director, head of global markets at Deutsche Bank.
The $10 billion in bond issues that have hit the market so far this year does not include those recently announced by Dolphin Energy and the Dubai government.
Deutsche Bank expects more issues to hit the markets between now and September due to the attractive rates at which regional issuers can issue bonds.
"While global interest rates are still very low, the regional credit spreads that widened following the political turmoil in the region have tightened during the last few weeks, giving a window of advantage for issuers in terms of pricing their issues.
I expect a lot more issuers from the region to take advantage of this window," said Al Khalifa.
This year, Deutsche Bank arranged five deals out of the 17 that have closed so far. The bank said it has a healthy pipeline of issues largely from top-tier corporates, regional sovereign issuers and sovereign related entities.
"They are clearly seeking quality. Thus there is a preference for sovereign and sovereign related issuers. Corporates with established cash flow and performance track records are also acceptable to international investors," he said.
"Entities like Dubai Holding, Jafza, DIFC etc all have bond maturities in the next 12 to 18 months, and if their plans are to use the bond markets to refinance some of this maturing debt, then now is as good a time as any," said Abdul Kadir Hussain, Chief Executive of Mashreq Capital.
While most bond issues from the region are targeted at international investors, Saudi Arabia is likely to have a fairly large share with a significant portion coming from domestic bond issues.
Analysts said following Dubai's sovereign issue a number of corporate issuers looking for refinancing are likely to tap the bond market before the current window of tighter pricing closes.
From / Gulf News