The Middle East bond market has the potential to exceed $40bn for 2011, matching 2010’s figures, according to Salman al-Khalifa, managing director and head of global markets of Middle East & North Africa (Mena) at Deutsche Bank.
There were 64 bond issuances in 2010 across the Mena region. This year, there have been a total of 17 issuances to date amounting to $10bn.
“We expect a number of issuances before Ramadan [during August] from top-tier corporations, governments and government-related entities, particularly in the UAE, Saudi Arabia and Qatar. It will be driven by achieving the right price for the issuers around volatility related to global markets,” says Al-Khalifa.
Deutsche Bank expects tough market conditions for the remainder of 2011 due to the political unrest in the region.
“Lending conditions remain tight and have not normalised or gone back to previous levels, but we remain optimistic on equity markets. There are a number of IPOs in the pipeline, but the market conditions need to be there for them to happen. We do not expect them before September,” says Al-Khalifa.
Large government spending plans in the GCC, particularly in infrastructure spending, high oil prices, growth in corporate earnings from spillover effects of the uprisings is driving interest from the international investor community.
In 2007, there were $33bn in bond issuances in Mena, dropping to $14bn during the financial crisis in 2008 and picking up to $44bn in 2009.