Jan 09 2013

MENA bond issuance up 60% on-quarter in 4Q12

By Joey Geadah of Zawya MENA bond issuance up 60% on-quarter in 4Q12

09 January 2013

The Middle East and North Africa (MENA) region witnessed 64 conventional bond issues worth USD 20 billion in the fourth quarter of 2012, an increase of 60% in value and 10% in the number of issues over the previous quarter.

This was despite a continuing fiscal crisis in the Eurozone as well as the political upheaval in some Arab nations. GCC, Levantine and North African countries, especially the corporate sector, all displayed their debt skills. According to data compiled by Zawya Bonds Monitor, the GCC was the most active market in the MENA region, accounting for 71% of total bond volume in 4Q12.

Source: Zawya Bonds Monitor

The UAE was the largest issuer in the quarter with USD 8.80 billion or 44% of the total volume of issues, followed by Qatar and Kuwait. The three countries combined issued almost the same number of bonds as Jordan's treasury. However, the overall value of GCC bonds was higher, topping the region. This was helped by Bahrain's return to the market with three issues - the GIB Bond 2017, the Bahrain Treasury Bills 15 and the Investcorp Bank Bond 2017. Oman had its share, and Kurdistan made an entry via its first ever corporate bond, the Gulf Keystone Petroleum Ltd. Bond 2017.

North Africa contributed 14 issues with Morocco taking the lion's share with eight. The reopening of previously issued Egyptian treasury bonds, which led to the upsizing of several issues, alongside a small issue of Tunisian corporate bonds were similar to previous quarters.

The average size of a MENA conventional bond in 4Q12 was USD 313 million, with Xstrata Finance Dubai Limited Bond 2016 being the largest at EUR 1.25 billion. Tenors ranged from one 30 years with three-year bonds being the most frequent. As much as 75% of MENA bonds were issued in the international markets.

Corporate bonds reemerged for the first time this year as the top issuer type surpassing sovereign issues. Financial services firms (USD 7 billion) exceeded government institutions for the first time in the year. However, the quarter witnessed the comeback of the telecommunications sector via Qatar's Qtel International Finance Limited Bond 2023.

Source: Zawya Bonds Monitor

Sources: Zawya Bonds Monitor; Zawya Sukuk Monitor

The gap between the value of conventional and Islamic bonds widened at the end of 2012. Despite a hunger for sukuk, the difference between MENA conventional bonds and MENA Islamic bonds increased by almost 6.5 times.

Zawya's Bond Monitor data show that the MENA region has about 187 issues worth USD 38 billion of conventional bonds maturing in 2013. The key this year will remain in capitalizing on global debt appetite alongside supportive political circumstances.

Joey Geadah is Zawya's bonds analyst and can be contacted at joeyg@zawya.com.

© Zawya 2013

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