Monday 1 June 2020

GCC capital market issuance to recover in 2019: S&P

DUBAI, April 8, 2019

Despite the GCC corporate and infrastructure capital market activity being slow in the first quarter of 2019 due to volatility in the global capital market, issuance volumes are likely to pick up strongly in the remainder of the year, led by Saudi Aramco and Saudi Telecom, said S&P Global Ratings in a new report.

“We have seen visibly lower issuance by GCC corporates in the first months of the year. Total bond and sukuk issuance in the year-to-date is around $1.1 billion, and largely from two issuers—the Saudi food and beverage group Almarai Company, which came to the market with its debut $500 million five-year 5.95 per cent sukuk, and a $600 million sukuk issued by Bahrain sovereign wealth fund Mumtalakat,” said S&P in the report.

“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. With average yields on GCC bonds and sukuk having falling in recent weeks to levels not seen since 2017, issuers see an opportunity to lock in lower rates on long-term borrowings,” it added.

“The regional real estate markets, notably in Dubai, Qatar, and Saudi Arabia, remain under pressure due to a combination of continued oversupply and waning demand. We expect Dubai residential real estate prices to fall further in 2019, approaching levels last seen at the nadir of the 2009-2010 property crash, before a gradual stabilization in 2020, though without a meaningful recovery in 2021,” the report said. – TradeArabia News Service


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