With money managers and investors shunning volatile stocks in the financial crisis, debt issues and restructuring have taken the lead in the Middle East financial markets, according to the Thomson Reuters investment banking league tables for the region.

“Thomson Reuters has a long history of pioneering in the region since opening its office in Alexandria in 1865,” said Basil Moftah, managing director of Thomson Reuters, Middle East and Africa.

“For the financial community, these well-respected league tables serve as an independent authority on the investment banking marketplace.”

Moftah was speaking as Thomson Reuters released the first in a new series of quarterly analytical reviews which examine the performance of the Middle East investment banking industry in the region’s debt and equity capital markets, both conventional and Islamic. The review includes dedicated regional rankings of banks and advisors operating in the Middle East based on their deals and fees.

In a snapshot of the current state of the industry for the year so far, the analysis of the Middle East drawn from Thomson Reuters data shows that compared with the same period in 2008:

• Investment banker and adviser fees at $431 million - down 57 per cent
• Mergers and acquisitions at $5 billion - down 70 per cent
• Equity issues at  $4.7 billion – down 86 per cent
• Loan values at $13.6 billion - down 82.5 per cent
• Debt issuance at $21.8 billion – up 43 per cent

In a tight market, the rankings show HSBC holding the top spot in both the Middle Eastern debt and equity capital market fee rankings, with $13 million and $11.5 million respectively. Morgan Stanley comes first in the mergers and acquisition fee rankings with $19.2 million while Calyon tops the syndicated loan fee ranking with $9.5 million.

Middle East debt issuance at $21.8 billion is up from $15.2 billion (compared with same period in 2008).  Agency, supranational and sovereign issues account for 35 per cent of the activity with $7.6 billion while investment grade corporate issues account for 65 per cent with $14 billion. Islamic debt issuance reached $9.7 billion with 27 issues - down 61 per cent when compared with 2008.

The top Islamic debt issuer is Malaysia with 45 per cent of the activity, with Saudi Arabia coming in second with 21.5 per cent. Financials; energy and power; governments and agencies are the most active industries with 36.5 per cent, 30 per cent and 28.5 per cent respectively.

Rothschild tops the M&A financial advisor Middle East rankings based on deal values with $15.39 billion.  Deutsche Bank came second with $15.31 billion. The top Middle East targeted deal for 2009 was France Telecom's $716 million acquisition of MobiNil Telecommunications. The top Middle East acquisition of the year worth $9.5 billion was Qatar Investment Authority’s acquisition in Volkswagen.

The most targeted M&A sector in the Middle East was financials with $2 billion, 39.4 per cent of the activity. However, this is down from $4.69 billion when compared with the first three quarters of last year.  Kuwait is the most acquired Middle East country with $2 billion, 41.5 per cent of the activity. The most acquisitive Middle East country is the United Arab Emirates with 48.5 per cent.

“Thomson Reuters data shows that it has been a tough year so far both regionally and internationally for investment banks and financial advisers,” Moftah said.
“While there have been encouraging signs in the region’s debt markets, it remains to be seen if there is sufficient confidence in talk of recovery to re-ignite the Middle East equity offering and loan markets which are witnessing dramatic declines so far this year compared with 2008.”

Equity issuance in the Middle East so far this year has reached $4.7 billion - down by 86 per cent year-on-year. Follow-ons