The value of bonds issued in the Middle East and North Africa (Mena) region will hit $30bn by the end of 2010, according to a leading industry head.

“There has been roughly $23.9bn bonds issued in the Mena region to date this year,” says Andrew Dell, head of debt capital markets for the global banking division at HSBC Middle East at MEED’s Middle East Capital Markets 2010 conference.

MENA bond issuances, 2010
Country Value ($m)
Qatar 7,000
Dubai 4,250
Abu Dhabi 2,533
Bahrain 2,500
Saudi Arabia 2,133
Egypt 2,100
Morocco 1,350
Lebanon 1,200
Kuwait 900
TOTAL 23,966
Sources: HSBC; Bloomberg

“Total issuance will definitely hit $30bn by the end of the year – if not before. The debt markets are performing very well today and seen a strong and sharp rebound from the events of 2009.”

Dell forecasts the regional bond market will record 25 per cent year-on-year growth in 2011, citing three key factors driving growth; the continued reluctance of banks to lend, low interest rates and the growing popularity of bonds as a vehicle for refinancings of maturing project finance loans.

The geographic breakdown of bond issuance in 2010 shows an increasing participation from Mena issuers outside the “traditional markets of UAE and Qatar”, added Dell, who is also forecasting a recovery in the sukuk (Islamic bond) market.

“Of the $23.9bn of bonds issued this year, 20 per cent were floated in the form of sukuk,” he says. “A growing proportion of Mena issued bonds will be sukuk in the coming years.”

Dell also thinks that debut bond issues from lower rated and sub-investment grade companies will be a growing trend next year.

“I think that both double and triple B-grade issuers are going to be coming to the market next year – that will be a trend in 2011.” 

Tripe B is classified as investment grade in today’s market.

Dell said he did not expect the lower ratings to deter investors from tapping the bonds: “I don’t think ratings are given the trust today that they used to be.”