Breaking summer and Ramadan barriers, MENA debt issuers showed no signs of complacency. Ranging from significant international Eurobonds to minor treasury bills, the MENA region had a strong appetite for tapping both local and overseas bond markets.
August 2012 recorded unprecedented volumes and number of issues compared to previous Eid months. According to data compiled by Zawya Bonds Monitor, USD 3.5 billion was sold across the region through 18 issues, an increase in value of 70% compared to August 2011, through 10 more issues.
Source: Zawya Bonds Monitor
All three major types of bonds (sovereign, quasi-sovereign and corporate) were noted in the month. Sovereign issuance still dominates the market with a clear domestic market type control. Whether treasury bonds or bills, the central banks of Jordan and Kuwait accounted for 72% of total issuance in August. Governmental entities were clearly the top debt players in a region hindered by a still-simmering Arab Spring and a fluctuating Eurozone crisis.
Despite reduced working hours during the fasting month of Ramadan, the volatile market conditions prompted financial sector issuers to act. Regional investors and global financial powerhouses seeking non-Western markets lured National Bank of Abu Dhabi into tapping the market via NBAD Bond 2019 . The seven-year, USD 750 million bond witnessed strong demand. NBAD, Citigroup, JPMorgan and Standard Chartered were the lead managers and bookrunners for the issue.
The Eurobond was accompanied by a 4.365% fixed USD 80 million NBAD Bond (Series 32) note, under the USD 5 billion EMTN program. The London Stock Exchange handled its listing.
The mammoth debt highlight came out of Qatar as a privately placed quasi-sovereign issue from the oil and gas sector, denominated in Japanese yen. Only the third yen-denominated bond from the GCC, Qatar Petroleum's samurai bond, QP Bond 2022 , is a rare offering by an entity whose only dollar-denominated deal was back in 2006. The advantages of such an infrequent activity tapping the samurai market provides regional investors with diversification of funding, with eye-catching low rates. The joint lead arrangers of this issue were Mitsubishi UFJ Morgan Stanley Securities, Daiwa Securities, Mizuho Securities, Nomura Securities and SMBC Nikko Securities. Japan Bank for International Cooperation was the guarantor. The issue is expected to stimulate the samurai bond market by Gulf issuers.
Real estate was represented in the MENA bond market, through two tranches worth MAD 1 billion by Morocco's Alliances Darna, Alliances Darna SA Bond 2017 (Tranche C) and Alliances Darna SA Bond 2017 (Tranche D).
Source: Zawya Bonds Monitor
Packed with deposits, banks in the world's top liquefied natural gas exporter are anticipating a Qatar Sovereign Bond by the nation's central bank. This could secure funding for years, if adequately executed. However, this should move in parallel with regulatory measures, which were first observed recently through monthly auctions of 91-, 182- and 273-day treasury bills.
Likewise, Morocco could tap the international bond market in October for a potential USD 1 billion Morrocco Sovereign Bond. Rabat could use the money to attain the postponed budgeting of deficits and controlling of public debt. Moreover, use of proceeds might also finance reforms regarding the Moroccan judicial system.
The Egyptian stock exchange witnessed several treasury bond subscriptions and re-openings, such as Treasury Bonds April 2019 and Treasury Bonds July 2015 II. There were several periodical partial redemption for Egyptian listed bonds, such as Contact Securitization Company Bond 2012 and Contact Securitization Company Bond 2013.
Debt activity is definitely recommencing in Egypt, yet such actions are only regulatory and it's still early to judge given the current post revolution circumstances, where reforms are still notions.
With more than two-thirds of the third quarter settled, the period seems inspiring yet wary of last-second retractions of debt transactions, with the alibi of waiting for more suitable market conditions always hovering in a foggy horizon.
Joey Geadah is Zawya's bonds analyst and can be contacted at joeyg@zawya.com.
© Zawya 2012
