GCC bonds and sukuk issuances slump 22% in Q1 to $28.3bln

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Primary issuances of Bonds and Sukuk in the GCC amounted to $28.3 billion in the first three months of 2023 compared to $36.3 billion raised during the same period in 2022, a decline of 22.1% year-on-year, Markaz said in its research report titled “GCC Bonds and Sukuk Market Survey for Q1-2023”.

In terms of the number of issuances, there were 62 primary debt issuances in the GCC during Q1-2023 compared to 76 issuances for the same period in 2022.

Geographical allocation

Saudi-based issuers led the GCC Bonds and Sukuk market during Q1 2023, raising a total of $21.3 billion, representing 75.4% of the total value raised in the GCC, followed by the UAE entities with 19.9% of the total primary issuances or equivalent to $5.6 billion.

Qatar entities raised a total of $0.9 billion representing 3.2% of the total primary debt issuances while Kuwaiti issuers raised a total of $0.4 billion in primary debt, representing 1.6% of all issuances. There has not been any debt issuance by Bahrain or Oman entities during Q1 2023.

Sovereign vs Corporate

Sovereign issuances by GCC entities made up 60.2% of the total value of GCC primary issuances during Q1 2023, amounting to $17.0 billion and down 21.2% year-on-year from its value in Q1 2022.

Corporate primary issuances, on the other hand, amounted to $11.3 billion during Q1 2023 constituting 39.8% of the total value of GCC primary issuances and marking a decline of 23.5% year-on-year from its value in Q1 2022.

Conventional vs Sukuk

Conventional issuances increased by 167.7% year-on-year during Q1 2023, with a total of $23.0 billion raised, representing 81.4% of the total value of primary issuances in the GCC.

On the other hand, Sukuk issuances made up 18.6% of the total value of primary issuances during Q1 2023, declining by 81.1% year-on-year to $5.2 billion, compared with $27.7 billion raised in Q1 2022.

Sector allocation

The Government sector accounted for the largest amount of primary debt issuances by value, raising a total of $11.5 billion, or 40.7% of the total value of issuances in the GCC in Q1 2023.

The Financial sector (including quasi-government entities) was second in its contribution to the total value of primary issuances in the region, raising a total value of $10.9 billion and representing 38.6% of the total market.

Maturity profile

Issuances with tenures of 10-30 years dominated the GCC debt capital markets by total value, raising a total of $13.5 billion, or 47.8% of the total value of issuances.

Issuances with tenures of less than 5 years came in second with a total value raised of $7.2 billion, or 25.5% of the total value of issuances.

Issue size profile

The size of GCC Bonds and Sukuk primary issuances during the first quarter of the year ranged from $4 million to $3.5 billion. Issuances with principal amounts greater than or equal to $1 billion raised the largest amount totaling $22.0 billion, representing 78% of the total primary issuances.

Currency profile

US Dollar-denominated issuances led the GCC Bonds and Sukuk primary market in Q1 2023, raising a total of $25.6 billion or 90.4% of the total value of GCC primary issuances.

This was followed by Saudi Riyal, where SR denominated issuances raised a total of $1.1 billion or 3.9% of the total value of issuances in the GCC.

Rating

In Q1 2023, a total of 90% of GCC primary Bonds and Sukuk issuances (in terms of value) were rated by either one of the following rating agencies: Standard & Poor’s, Moody’s, Fitch and/or Capital Intelligence, of which 86% were rated as Investment Grade Issuances.