- High demand for GCC sovereign bonds led by Saudi
- Despite muted activity, Q1 marked by a number of milestones; including a debut debt offering (Almarai sukuk) and the first ever IT IPO on Saudi’s Tadawul
Dubai: After a busy end to last year, 2019 started softly with just one IPO in the GCC for this quarter. Overall, Gulf markets performed steadily, with Tadawul continuing to lead the GCC stock markets, followed closely by Boursa Kuwait. Global activity was also muted, with IPO proceeds more than halved compared to the same quarter in 2018. Meanwhile, efforts to attract investments into the Gulf continue, with the UAE Government set to confirm the sectors eligible for 100 percent onshore foreign ownership. Continued privatisation efforts across Saudi Arabia, Oman and Kuwait is expected to drive activity.
Steve Drake, PwC Middle East Capital Markets Leader said: “Although 2018 closed on a promising note, 2019 started slowly with a single listing in the GCC by Al Moammar Information Systems, which raised USD 58m on Tadawul. This is compared to five listings in the last quarter of 2018, raising over USD 1bn, and four in Q1 2018 with proceeds totalling USD 430m. This sole IPO was, nonetheless, a milestone for the Kingdom as it was the first ever IT company to list on Tadawul.”
He added: “Looking ahead, we expect some rebound in the level of GCC IPO activity compared to the levels seen in this quarter as a number of companies in the region have indicated their intention to list in the next 12 to 18 months. The region’s debt market continues to be active, with debt products proving to be of interest to investors. In addition to the seasoned bond issuers, the quarter also witnessed a number of debut debt offering, namely Almarai’s USD500m sukuk. With the significant oversubscription of Saudi Aramco’s first ever bond offering on 9 April, we move into the second quarter of the year on an optimistic note.”
Tadawul sees the GCC’s only IPO for Q1 2019
As the first IT company to ever list in Saudi’s Tadawul, and the only listing for the GCC this quarter, Al Moammar Information Systems’s retail offering was 149% oversubscribed, raising USD 58m by issuing 4.8m shares.
High demand for GCC sovereign bonds
Sovereign bond issuances dominated GCC debt market activity this quarter, with notable multi-tranche issuances by the State of Qatar (USD 12bn) and the Kingdom of Saudi Arabia (USD 7.5bn).
The inclusion of GCC sovereign bonds to JP Morgan’s Emerging Market Bond Index (EMBI) from January 2019 is expected to further boost the demand for GCC sovereign bonds, as evidenced by the over-subscription of the recent KSA and Qatar bond issuances.
Corporate debt activity was also very active with a number of issuances this quarter stemming from banking institutions, including a Tier 1 sukuk by Dubai Islamic Bank PJSC and programme drawdowns by Qatar International Islamic Bank, Mashreqbank PSC and First Abu Dhabi Bank PJSC.
We expect a significant spike in GCC debt activity with the debut issuance by Saudi Aramco in Q2.
Full report here: pwc.com/me/capital-markets-watch
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About PwC’s GCC Capital Markets Watch
GCC Capital Markets Watch surveys IPOs on GCC’s principal stock exchanges and market segments as well as conventional bond and sukuk issuances on a quarterly basis. This survey was conducted between 1 January 2019 and 31 March 2019 and captures the relevant data based on their transaction date. GCC Capital Markets Watch is prepared by PwC Middle East (www.pwc.com/me). All market data is sourced from publicly available information and has not been independently verified by PwC.
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