Global securities house Merrill Lynch is taking full advantage of moves by Middle Eastern governments to open up their economies. After successful ventures in Jordan and Lebanon, the bank is lobbying hard to lead manage Egypt’s first Eurobond and is preparing to launch the first foreign fund to invest in a Gulf stock market.

Merrill Lynch was lead manager of the $60 million Eurobond launched on 20 June by Lebanon’s Credit Libanais. The Eurobond received a strong response, which pushed up the price and led to a tightening of the spread to 314 basis points over US trea suries from 320 points.

The bank has also suggested that Egypt should issue a Eurobond, which it argues will put the country on the map for international investors. However, the Egyptian government has so far been unresponsive. Minister for Economic Follow-up Youssef Boutros Ghali said on 27 June that Egypt had no plans to launch a Eurobond, but will solicit ratings from Moody’s Investors Service and Standard & Poor’s (S&P) with the help of an international bank (see Egypt).

In 1995, Merrill Lynch assisted Jordan in obtaining ratings from Moody’s and S&P ahead of the second Middle East & North Africa economic summit in October. S&P gave Jordan a B+ rating for foreign currency debt and triple BBB- for dinar-denominated debt. Moody’s assigned Jordan a Ba3 longterm rating for its foreign currency debt.

The bank is now making fresh moves into the Gulf. In Kuwait, it has been holding talks with local firms about setting up a fund to enable foreigners to invest in the stock exchange. This will be the first equities fund set up by an international bank in the GCC. No agreements have been signed, but the fund is expected to be launched by the end of the year (see Kuwait).