Global debt has increased by more than 130% since 2,000. China's debt has quadrupled since 2007 and the U.S. debt exceeds the country's USD 18 trillion GDP.
The Federal Reserve is still assessing the ramifications of a hike in interest rates, which is expected to raise the cost of financing U.S. debt by USD 1-2 trillion over the next couple of years.
Deflationary risks in the euro zone receded in April with consumer prices unchanged from a year earlier, following four months of price declines which had led the European Central Bank to start printing money in March to inject more cash into the economy.
Despite the drop in oil prices, the International Monetary Fund expects the Gulf Arab region to record economic growth of 3.4% in 2015 thanks to low levels of public debt which allow for cheap borrowing.
Saudi Arabia, the world's largest oil exporter, could consider issuing debt for the first time since 2007 instead of drawing down its foreign currency reserves to cover a state budget deficit.
With more than 20 bonds in the pipeline, the MENA bonds market is expected to see an additional USD 13.5 billion in coming months, led by governments and companies from the United Arab Emirates, Qatar, Saudi Arabia, Oman, Bahrain, Iraq, Morocco, Jordan and Egypt.
The Month in Review
The MENA region raised USD 4.74 billion worth of capital through 17 issues in April, down 17% in terms of value and 35% in number of issues compared with a year earlier.
North Africa led the market with USD 2.58 billion raised through six issues, followed by GCC countries with USD 1.97 billion via nine issues and the Levant region with USD 177 million from two issues.
Source: Zawya Bonds Monitor
Egypt was the largest issuer in April, representing 33% of total value, followed by Kuwait (32%), Morocco (21%), Bahrain (8%), Jordan (4%), UAE (1%) and Tunisia (1%).
Egypt's finance ministry issued the largest domestic bond worth EGP 8.5 billion (USD 1.11 billion) to finance the country's budget deficit. The issuance, which matures in 2020 and carries a 12.55% fixed coupon rate paid semiannually, is listed on the Egyptian Stock Exchange.
The second largest was a Eurobond issued by OCP, formerly known as Office Cherifien des Phosphates, worth USD 1 billion. It is listed on the Irish Stock Exchange, holds a 4.5% fixed coupon rate paid semiannually and matures in 2025. Barclays and Morgan Stanley are lead managers for the issuance, and Fitch assigned a BBB- to the issuance.
The third largest international bond was issued by National Bank of Kuwait and accounted for USD 700 million. It is listed on the Irish Stock Exchange, carries a 5.75% fixed coupon rate paid semiannually and can be redeemed by the bank after six years. The bank mandated Citigroup, HSBC, National Bank of Abu Dhabi and Standard Chartered for the issuance, and Dentons acted as the legal advisor. The twice oversubscribed bond will be guaranteed by the bank itself.
Source: Zawya Bonds Monitor
Bond Analysis
Sovereign bonds led the MENA capital market in April in terms of volume and size, with nine issues worth a total of USD 2.58 billion, followed by corporate bonds which raised USD 2.16 billion via eight issues.
In terms of sectors, governmental institutions accounted for 55% of the total raised from issues, followed by financial services with 24% via seven bonds and industrial manufacturing with 21% from a sole issuance.
Domestic bonds represented 55% of the total issue size at USD 2.6 billion from 12 issues, while international bonds accounted for 45% with USD 2.14 billion from five issues.
In terms of currency, USD led the market with 45% of the total issue size backed by the international eurobonds, followed by EGP (33%), KWD (17.2%), JOD (4%), TND (0.5%) and CNY (0.3%).
In terms of the overall size of issues, Irish Stock Exchange came first with listings at USD 2.1 billion, follwed by Egyptian Stock Exchange with USD 1.57 billion, Amman Stock Exchange with USD 177 million, Luxembourg Stock Exchange with USD 43 million and Tunisia Stock Exchange with USD 15.6 million.
© Zawya 2015
The Federal Reserve is still assessing the ramifications of a hike in interest rates, which is expected to raise the cost of financing U.S. debt by USD 1-2 trillion over the next couple of years.
Deflationary risks in the euro zone receded in April with consumer prices unchanged from a year earlier, following four months of price declines which had led the European Central Bank to start printing money in March to inject more cash into the economy.
Despite the drop in oil prices, the International Monetary Fund expects the Gulf Arab region to record economic growth of 3.4% in 2015 thanks to low levels of public debt which allow for cheap borrowing.
Saudi Arabia, the world's largest oil exporter, could consider issuing debt for the first time since 2007 instead of drawing down its foreign currency reserves to cover a state budget deficit.
With more than 20 bonds in the pipeline, the MENA bonds market is expected to see an additional USD 13.5 billion in coming months, led by governments and companies from the United Arab Emirates, Qatar, Saudi Arabia, Oman, Bahrain, Iraq, Morocco, Jordan and Egypt.
The Month in Review
The MENA region raised USD 4.74 billion worth of capital through 17 issues in April, down 17% in terms of value and 35% in number of issues compared with a year earlier.
North Africa led the market with USD 2.58 billion raised through six issues, followed by GCC countries with USD 1.97 billion via nine issues and the Levant region with USD 177 million from two issues.
Source: Zawya Bonds Monitor
Egypt was the largest issuer in April, representing 33% of total value, followed by Kuwait (32%), Morocco (21%), Bahrain (8%), Jordan (4%), UAE (1%) and Tunisia (1%).
Egypt's finance ministry issued the largest domestic bond worth EGP 8.5 billion (USD 1.11 billion) to finance the country's budget deficit. The issuance, which matures in 2020 and carries a 12.55% fixed coupon rate paid semiannually, is listed on the Egyptian Stock Exchange.
The second largest was a Eurobond issued by OCP, formerly known as Office Cherifien des Phosphates, worth USD 1 billion. It is listed on the Irish Stock Exchange, holds a 4.5% fixed coupon rate paid semiannually and matures in 2025. Barclays and Morgan Stanley are lead managers for the issuance, and Fitch assigned a BBB- to the issuance.
The third largest international bond was issued by National Bank of Kuwait and accounted for USD 700 million. It is listed on the Irish Stock Exchange, carries a 5.75% fixed coupon rate paid semiannually and can be redeemed by the bank after six years. The bank mandated Citigroup, HSBC, National Bank of Abu Dhabi and Standard Chartered for the issuance, and Dentons acted as the legal advisor. The twice oversubscribed bond will be guaranteed by the bank itself.
Source: Zawya Bonds Monitor
Bond Analysis
Sovereign bonds led the MENA capital market in April in terms of volume and size, with nine issues worth a total of USD 2.58 billion, followed by corporate bonds which raised USD 2.16 billion via eight issues.
In terms of sectors, governmental institutions accounted for 55% of the total raised from issues, followed by financial services with 24% via seven bonds and industrial manufacturing with 21% from a sole issuance.
Domestic bonds represented 55% of the total issue size at USD 2.6 billion from 12 issues, while international bonds accounted for 45% with USD 2.14 billion from five issues.
In terms of currency, USD led the market with 45% of the total issue size backed by the international eurobonds, followed by EGP (33%), KWD (17.2%), JOD (4%), TND (0.5%) and CNY (0.3%).
In terms of the overall size of issues, Irish Stock Exchange came first with listings at USD 2.1 billion, follwed by Egyptian Stock Exchange with USD 1.57 billion, Amman Stock Exchange with USD 177 million, Luxembourg Stock Exchange with USD 43 million and Tunisia Stock Exchange with USD 15.6 million.
© Zawya 2015
