Monday, May 08, 2017

Sharjah

Sharjah doesn’t have any plans for a bond or a sukuk issue after the emirate undertook a $500 million (Dh1.84 billion) sukuk issue in January last year, a government official said on Monday.

“Currently we don’t have any plans for bonds or sukuk issuance in the near future. We will always keep a close eye on market conditions and keep our own financial needs under review,” Tom Koczwara, director, debt management office, finance department at Government of Sharjah, told Gulf News on the sidelines of the Euromoney conference.

“Our priorities remain the same, which are to ensure that we undertake timely financial transactions to meet government’s liquidity needs,” Koczwara said.

The debt management office also works with government-owned entities for their project financing and specific needs.

Not biggest factor

Koczwara said he is of the opinion that the US interest rate hikes won’t be the biggest factor in deciding a bond issue.

“We will see general market environment and financing needs of the governments as the key drivers in the size of issuance,” he said.

The volume of international bond issues from the Gulf may hit a record high for a second straight year in 2017, according to market experts.

“A healthy or a substantial bond issuance program is positive for this region. We need to be developing a regular access to international debt capital markets and in due course developing local debt capital markets,” he added.

“There is ample appetite in the market for issuance. I hope it would be substantial level that show that GCC players are important regular players in the global market,” Koczwara said.

Saudi bonds

Jumbo bond issues by governments — such as Saudi Arabia’s $17.5 billion (Dh64.27 billion) debut sale last October — the largest ever in emerging markets — have deepened the market and created new pricing benchmarks.

“Saudi sukuk was a huge success and was supportive of local market. This shows the confidence in both the regional and GCC story and ability of the governments here to adapt to changed economic conditions,” Koczwara said.

As GCC governments, “we have low levels of debt to GDP, so we are relatively well insulated against any interest rate risk,” he added.

However, according to S&P Global Ratings, Sharjah’s debt as a percentage of GDP had rapidly increased since 2014 due to persistent fiscal deficits and increased capital spending.

S&P said it expects the Sharjah government deficit for 2014-2017 to average close to 3 per cent of GDP, in comparison with 1 per cent of GDP between 2010 and 2013.

By Siddesh Suresh Mayenkar Senior Reporter

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