Mideast public debt markets 'are robust'
Manama, April 28, 2011
The regional public debt markets have continued to be reasonably robust in the first quarter of the year, according to a report by international professional services organisation PwC.
Some sizeable issuances placed include, among others, Dubai Electricity and Water Authority's $2 billion placement, International Petroleum Investment Company's $2.5 billion offering and Qatar Telecom's $1.5 billion issuance.
"The size of these and other offerings is evidence that both regional and international appetite for fixed income investments remains strong albeit seemingly primarily for state-owned entities," the report said.
"Whilst volumes remain strong, spreads have widened in the first quarter, which is an indicator that regional debt prices have moved upwards which may, in part, be a factor of the recent regional unrest and the uncertainty that has caused.
"The bond and sukuk markets appear to continue to be reasonably strong although we have recently seen some issuances deferred.
"Issuers coming to the market have generally paid a higher price for their debt than may have been the case in the final quarter of last year," the report said.
PwC believes that recent political and economic upheaval in the GCC has impacted negatively investor confidence with a number of companies reassessing their initial public offering (IPO) plans and either deferring or shelving future IPOs.
"The first quarter of 2011 has been very disappointing so far for IPOs in the region with no transactions yet to be reported on any of the GCC exchanges compared to the three offerings in the last quarter of 2010 which raised approximately $1 billion.
"The equity markets in the GCC region have witnessed both, depressed volumes and market value erosion which were at their lowest levels in February this year," the report said.-TradeArabia News Service