12 Feb 2018 - 0:54

GCC primary debt issuances expand to $174.17bn in 2017

By Satish Kanady / The Peninsula

DOHA: The aggregate primary issuance of bonds and sukuk by GCC entities, including central banks’ local issuances (CBLIs), GCC sovereign and corporate issuances, totaled $174.17bn in 2017, a 3.96 percent increase from the total amount raised in 2016.
Central banks’ local issuances are fixed income securities issued by GCC central banks in local currencies and with short maturities for the purpose of regulating levels of domestic liquidity. During 2017, a total of $69.90bn was raised by the GCC central banks, namely by the Central Bank of Kuwait, Bahrain, Qatar, and Oman,as per the publicly available documents from the respective central banks. The Central Bank of Kuwait raised the highest amount with Kuwait Dinar10.93bn (36.179bn), representing 51.76 percent of the total amount raised by CBLIs through 70 issuances, followed by the Central Bank of Bahrain, which raised a total of BHD5.39bn ($14.33bn), Kuwait Financial Centre (Markaz) said in a report yesterday.
The GCC Bonds and Sukuk market is composed of bonds and sukuk issued by GCC Sovereign, corporate entities and financial institutions, for financing purposes in local and foreign currencies. A total of $104.26bn was raised in the GCC bonds market in 2017, a growth of 1.78 percent from $102.44bn raised in 2016.
On a quarterly basis, the fourth quarter of 2017 recorded the highest value of issuance with USD39.44 billion raised through 59 issuances while the third quarter was the most subdued as $17.87bn was raised through 45 issuances.
Geographical Allocation: Saudi Arabia was the leading issuer in 2017, raising $41.60bn through 20 issues and representing 39.9 percent of the total value raised by the GCC issuers during the year.
The UAE based issuers raised $32.61bn during 2017, up by 35 percent as compared to $24.3bn raised in 2016 and representing 31.3 percent of the total market. Kuwait entities represented 10.4 percent of the total issuances, raising $10.83bn as compared to $4.52bn raised in 2016.
Omani issues represented 7.8 percent of the total value of issuances, raising $8.12bn through 8 issues.
Amidst the regional crisis, Qatari entities raised $6.18bn from 62 issues, however the primary issuances dropped by 67.8 percent compared to $19.22bn raised in 2016. Bahraini entities represented 4.7 percent of the total issuances, raising $4.90bn through 6 issues.
Sovereign issues continued to dominate the GCC bonds and Sukuk market in 2017 contributing 62.6 percent to the overall market with a total value of $65.28bn as compared to $65.82bn in 2016. Total value raised by corporate entities in 2017 increased by 6.46 percent, to $38.98bn in 2017 from $36.61bn in 2016. Saudi Arabia Government raised a total of $37.28bn out of which SAR58.45bn ($15.78bn) through domestic bonds and $21.5bn through US Dollar denominated Bonds and Sukuk. The year was also instrumental for the Kuwaiti debt market as the Kuwait Government issued its debut Euro-dollar bonds in March raising $3.5bn through five-year bonds at a coupon of 2.75 percent and $4.5bn through ten-year bonds at a coupon of 3.75 percent. Abu Dhabi, Oman and Bahrain governments raised $10bn, $7bn and $3bn respectively. Qatar was the only GCC sovereign entity not tapping the international bond markets in 2017.
Conventional issuances raised $81.42bn, or 78.08 percent of the total amount raised in GCC bonds and sukuk market during 2017. Sukuk raised $22.85bn, 81 percent higher as compared to $12.63bn raised in 2016 and represented a share of 21.91 percent of the market in 2017.
On the sector allocation, the Markaz report noted government sector accounted for the largest amount raised during the year, with $65.28bn representing 62.6 percent of the total amount raised as compared to $65.82bn issued in 2016. The Financial sector followed with $22.29bn (21.4 percent of total market) raised through 227 issues.
Issuances with tenures of six to ten years raised the highest amount, $42.9bn, through 35 issuances, representing 41.2 percent of the total amount raised. However, maturities of 5 years or less increased to $39.79bn representing 38.2 percent of the market as compared to $11.93bn in 2016 representing 11.4 percent.
During 2017, 73.3 percent of the total issuances or 126 GCC Bonds and Sukuk issuances, with an aggregate value of $76.46bn were listed on exchanges. Listing on international exchanges accounted for 99 percent of the listed issues with an aggregate value of $75.56bn.
As of 31 December 2017, the total amount outstanding of corporate and sovereign bonds and sukuk issued by GCC entities was $425.68bn. Government issuances made up the majority of the total amount outstanding with $203.39bn, or 47.8 percent of the total amount.