MENA Bonds to Cross $40b Mark

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This year the bond market in the Middle East and North Africa region is expected to match or exceed last year’s level of $40 billion (Dh146 billion) because of increased borrowing requirements and improved pricing, said a senior Deutsche Bank executive on Tuesday.

There had been 17 issues so far this year worth $10 billion, with Deutsche Bank on five of them, said Salman Al Khalifa, the bank?s global head of markets for the region.?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. However, Deutsche Bank expects increased number of 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.

“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.

Though 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. It is likely that following Dubai’s sovereign issue a number of corporate issuers looking for refinancing may tap the bond market before the current window of tighter pricing closes.

According Bloomberg data, global Islamic bond sales climbed 24% so far this year to $7.8 billion from the same period last year as borrowing costs declined.

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