(A figure for the amount of corporate and infrastructure debt issued in the GCC last year has been added).

Ratings agency S&P has said that 2017 is set to be a "bumper year" for debt issuance via capital markets.

The company issued a report on Wednesday which stated that despite mounting uncertainty in the region, the amount of capital market issuance is already more than double last year's total which, for corporate and infrastructure debt issuance stood at $8.93 billion.

It said that issuers are keen to lock in relatively low, long-term interest rates as local central banks seek to match interest rate rises introduced by the US Federal Reserve, and political risks in the region mount.

S&P Global Ratings credit analyst Tommy Trask said in a press statement accompanying the report that "the most unpredictable and significant risk factor is political risk, most notably the increasing tensions between Saudi Arabia and Iran playing out in Bahrain, Iraq, Lebanon, Qatar, Syria, and Yemen, charges of corruption against ministers and leading business figures in Saudi Arabia, and the ongoing trade embargo of Qatar".

It said that budget-constrained governments in the region are looking to tap capital markets via the issuance of debt through more government-related entities, citing the $3 billion issue of project bonds by Abu Dhabi Crude Oil Pipeline (ADCOP) and the $1 billion issue by Bahrain-based oil and gas company nogaholding as examples.

However, it pointed out that as GDP growth slows across the region, its forecasts for existing issuers are weakening. It said that 85 percent of the ratings actions it had taken this year had been negative, with half of those related to entities in Oman and Bahrain.

It also predicted that issuers from the real estate market faced "difficult operating conditions", especially in Qatar where the market is suffering as a result of the blockade imposed by four countries including Bahrain, Egypt, Saudi Arabia and the United Arab Emirates.

S&P had already downgraded debt issued by one of Qatar's big developers, Ezdan Holding, to junk status earlier this week.

In a separate paper, the agency also said that issuers of Gulf debt could potentially cut the costs of raising debt by improving corporate governance.

S&P said management and governance scores in the Gulf Cooperation Council (GCC) countries was "relatively weak" by global standards.

The ratings agency said that companies it rates in the Gulf tend to be owned by governments or powerful local families, that boards often lack independence and that transparency is weak, with many private entities only offering "limited" public information.

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© ZAWYA 2017