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Mena Region Bond Market May Exceed $40B In '11 - Exec

Wednesday, Jun 15, 2011

(This story was originally published Tuesday.)

DUBAI (Zawya Dow Jones)--The Middle East and North Africa primary bond market may reach or exceed last year's value of $40 billion on the back of improved pricing and increased borrowing requirements, a senior Deutsche Bank executive said Tuesday.

"This year, it is $10 billion year to date and I expect full-year volumes to be at or above last year's levels," Salman Al Khalifa, managing director, head of global markets at Deutsche Bank, told reporters in Dubai. "This is mainly driven by pricing and by increased borrowing requirements from the region."

"This year, Deutsche has arranged so far five deals out of the total 17 closed so far," Al Khalifa said, adding that the Middle East and North Africa region saw a total of 64 new bond issues worth $40 billion in 2010, down from $44 billion in 2009.

"We're seeing now a backlog of issues coming to market and we'll see more before Ramadan," Al Khalifa said, adding that more debt papers are expected from the U.A.E., Saudi and Qatar. Credit spreads widened by around 150 basis points during the Arab Spring but as events stabilized they tightened again so they're now around 20 basis points wider than the end of last year, Al Khalifa explained. "But this, coupled with very low U.S. interest rates, means credit became much cheaper," he said.

Among the latest companies seeking to tap debt markets is Abu Dhabi-based Dolphin Energy , in which Occidental Petroleum Corp. (OXY) and Total S.A. (TOT) are shareholders.

Dolphin, which imports gas from Qatar to the U.A.E., has mandated BNP Paribas , Royal Bank of Scotland , Societe Generale, The Bank of Tokyo-Mitsubishi , and Abu Dhabi Commercial Bank on its planned bond issue that aims to raise more than $1 billion to refinance existing debt.

Also in the market is the Dubai government, which is meeting investors this week ahead of a planned dollar-denominated bond issue. Dubai's department of finance has appointed UBS, RBS and Emirates NBD for the planned bond issue under its EMTN program.

The plans follow the launch of a five-year, $1 billion bond issue by Dubai's flagship carrier Emirates Airline earlier in June, which received high levels of investor interest in a sign that confidence in Dubai's economic fundamentals is slowly returning.

Separately, Abu Dhabi government-owned International Petroleum Investment Co., or IPIC , on Sunday announced plans for a non-deal investor update roadshow.

-By Mirna Sleiman, Dow Jones Newswires; +9714 446-1698; mirna.sleiman@dowjones.com

Copyright (c) 2011 Dow Jones & Co.

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15-06-11 0401GMT