The bond and sukuk pipeline in the six-member economic bloc of GCC remins robust this year as the corporates, governrment-related entities, sovereigns and financial insitutions continue to tap the international debt capital markets.
Qatar International Islamic Bank (QIIB), a Doha-based sharia-compliant lender is the latest to layout plans to raise funds from fixed income market. The lender has received an extension of approval from shareholders to establish a $2bn sukuk programme.
The programme was originally approved in 2013 and the shareholders have authorised the banks board to decide the size of each issuance, terms and conditions of the transactions and issuance currency after getting approvals from supervisory authorities, QIIB said in a statement to Qatar Exchange, where its shares are traded.
The general assembly also separately gave extension of its approval to issue additional Tier1 Sukuk nonconvertible into ordinary shares of up to QR3bn ($823.9m), according to 4 April bourse filing.
We got the approval from todays AGM to go ahead for the senior and secured Sukuk, and also for Tier1 Sukuk. Our normal Sukuk of $700m [issued earlier] will mature in October. So we might replace it with the same amount, or less than that amount, which will depend on the requirements of funds, Abulbasit Al Shaibei, CEO of QIIB told local media after the shareholders meeting.
QIIB plans to tap the debt market to boost its capital and to refinance existing debt comes at a busy time for the regional issuers. A number of financial institutions and corporates have consistently tapped debt capital markets in 2017, joining a growing number of government related entities and sovereigns from the region as they shore up reserves and improve capital ratios.
It has been a deal bonanza so far this year this year as institutions and governments try to mitigate the impact of lower oil prices. Crude, the main source of revenue for the Gulf states, has dropped from $115 in mid-2014 to to about $50 a-barrel this year.
Shareholders of Masraf al-Rayan, another Qatari sharia-compliant lender on 3 April approved the issuance of sharia-compliant bonds worth up to $2bn to meet the lenders liquidity requirements.
The energy investment firm, which in March reported a 2016 loss of AED18.55bn ($5.05bn) due to an AED16.9bn post-tax impairment on oil and gas assets, will raise the funding to cover debt maturities due in October 2017 and January 2018.
Saudi Arabians biggest real estate developer by market capitalisation, Dar al-Arkan, also plans to launch a $500m sukuk this week, the first international debt issuance by a Saudi corporate this year. The developer will use the proceeds partly to refinance existing debt, news agency Reuters cited the bond prospectus as saying.
Nogaholding, the investment arm of Bahrains National Oil and Gas Authority (Noga), is also expected to tap the international debt capital markets with sale of Islamic bonds later this year. The company has already spoken to banks and is likely to raise funds in the second half of 2017, the people aware of discussions told MEED in March.
The company has been holding discussions with banks since early this year and has yet to invite pitches for formal mandates.
Oman, Bahrain and Kuwait are the sovereign issuers that have raised funds through sale of bonds in 2017 and Saudi Arabia, the largest Middle Eastern Economy, is also poised to raise funds through a sovereign US dollar denominated sukuk. A Riyadh-based banking sources, however, said that the Saudi issue is not likely to hit the markets before the third quarter of this year.
In mid-March, Kuwaits Warba Bank successfully priced its $250m sukuk, just ahead of the US Federal Reserve rate hike, the third increase in the last decade. The Gulf central banks, mimicked the Federal Reserve moves, raising key rates as most currencies in the region are pegged to US dollar.
Within the banking sector, Abu Dhabi Commercial Bank (ADCB), Qatar National Bank, Dubai Islamic Bank and National Bank of Abu Dhabi are some of the other lenders that have shored up their capital through bond transactions.