MENA Bonds Insight
Middle East and North Africa Conventional Bond Market Newsletter
brought to you by Zawya Bonds Monitor

Is it all over for MENA fixed income?

A chorus of voices has recently become increasingly loud, signing from the same hymn sheet of 'It's all over for bonds'. The lyrics are seductive, the tempo attractive, but there is something definitely out of tune with the story.

The bond market is a function of two key variables that drive most of the returns - the risk free yield curve and the credit spread.

For our market, the risk free curve is deemed to be the US Treasury curve. Purists may argue that the US curve is no longer risk free with the US having lost its coveted 'triple A' moniker last year, but the fact is that US dollar credit is priced off the US curve and there is no credible alternative. Every time MENA-based entities issue in US dollars, the market will price off the US dollar curve.

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Healthy sovereign debt pipeline in 4Q-2012

MENA countries sold a combined total of USD 10.2 billion of conventional bonds in the third quarter of 2012, down 36% from the previous quarter, according to data compiled by Zawya Bonds Monitor. North Africa was the most active market in the MENA region, accounting for 39% of total bond volume in the July-September period of this year.

August alone recorded unprecedented issuance value and number of issues compared to previous Eid months. USD 3.5 billion was sold across the region through 18 issues, an increase in value of 70% compared to August 2011, through 10 more issues.

MENA's bonds market in 4Q12 will anticipate a prolific sovereign debt pipeline. GCC, Levant and North Africa will compete to display their sovereign debt skills.

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Download Bonds Quarterly Bulletin - 3Q12