Positive sentiments have lifted the Middle East and North Africa (MENA) bond market in March, raising USD 5.4 billion worth of capital from 23 issues - a dramatic 60% growth compared with the same month last year.
During the period, North Africa was notably absent from bond activities as most investors tapped the debt market via 10 issues from Levant (through the Central Bank of Jordan) and the GCC. 
Source: Zawya Bonds Monitor
Abu Dhabi Commercial Bank's (ADCB) dual tranches were the largest issues in March 2013, hitting a total value of USD 750 million, with tenors between five and 10 years.
The two issues were hosted on the London Stock Exchange, similar to the majority of previous debt issues by the Emirati bank. The bond was managed by ADCB, Barclays, ING Investment Management, JP Morgan, National Bank of Abu Dhabi and the Royal Bank of Scotland.
Another UAE-based lender, Emirates NBD, also launched a dual tranche with a USD 750 million issue, which was 3.5 times oversubscribed. The debt tool was 47% allotted to MENA-based investors, 28% to Asians and 25% to European subscribers.
Meanwhile, the Sultanate of Oman re-entered the MENA bonds market this year through a USD 500-million issuance by Bank Muscat. The bond, which falls under the bank's USD 800 million euro medium-term note (EMTN) program, was 6.6 times oversubscribed - an indication of investors' strong appetite. Approved in February 2011, Bank Muscat's EMTN program aims to launch a sequence of bond issues over a 10-year period with a bundle of maturities and currencies.
Multi-currency issuance
The last month of 1Q13 gave the MENA bonds market a new dimension by supplying new issues through various currencies.
National Bank of Abu Dhabi tapped international markets via two overseas currencies - the Australian dollar and Mexican peso. NBAD AUD Bond 2018, only the second kangaroo bond out of the region, was equivalent to AUD 300 million with a 5% coupon rate.
According to NBAD group treasurer, Stephen Jordan, the new kangaroo bond was aimed at "diversifying the funding base and extending the maturity profile". The second bond, the NBAD Uridashi Bond 2028, proved to be the highlight of the month. The bond was worth MXN 210.325 million with a 0.5% coupon rate and a tenor of 15 years. What is striking about the bond was that it was issued in Mexican pesos, but launched in the Japanese market. One reason for the Uridashi bond is that foreign currencies may supply investors with higher interest rates than yen-denominated bonds.
In the Levant region, the Central Bank of Jordan remained the premier debt player after it issued 10 treasury bonds/bills with nine issues worth JOD 75 million and one JOD 70-million, all having a coupon rate ranging from 7.7% to 8.6% .
March's bond issuance averaged USD 235 million per issue with an average coupon of 4.85% and a tenor of 4.1 years.
Source: Zawya Bonds Monitor
Potential bond transactions look encouraging, especially from new issuers, resulting in diversification in the market, currency of issuance and overall debt portfolio.
Power and utilities company Marafiq, which is also a Saudi Arabian quasi-sovereign entity, may tap the MENA bonds market for the first time through a Saudi-riyal local bond issue. The firm has chosen HSBC to arrange the debt issuance.
Central Bank of Libya (CBL) might also follow the lead of other MENA nations by tapping the bonds market through a sovereign treasury issue. The nation, known for its significant oil reserves and hefty petroleum earnings, will likely benefit from an introductory bonds issue.
According to the CBL governor Saddek Omar Elkaber, the anticipated issue will not only stimulate the investment banking sector in Libya, but also serve as a precursor to a domestic bond market. The bank, however, failed to disclose any additional information related to its bonds plan.
Following a healthy first-quarter performance, MENA's bond market appears to be shifting to a new gear. The rest of the year could see continuing vibrant activity for the regional market.
The article was written on April 11, 2013.
Joey Geadah is Zawya's senior bonds analyst. He can be reached at joeyg@zawya.com.
© Zawya 2013
