Trends in the GCC bonds and Sukuk primary market H1 2014

14/09/2014 12:44 AST

Kuwait Financial Centre ‘Markaz’, in its recent research report GCC Bonds & Sukuk Market Survey, reports aggregate primary issuance of bonds and sukuk in the GCC totaled $56.71 billion in H1 2014, a 24.71 per cent increase from the total amount raised in H1 2013. June was the most active month in terms of both the amount raised and the number of issuances. A total of $15.55 billion was raised during the month through 44 issues.

GCC Central Banks Local Issuances (CBLI)

Central Bank Local Issuances are debt securities issued by GCC central banks in local currencies and maturities of less than one year, to regulate the levels of domestic liquidity. A total of $32.14 billion was raised by the central banks of Kuwait, Bahrain, Qatar, and Oman during H1 2014. During H1 2014 CBQ surpassed CBK as the top issuer, in contrast to the previous years, by issuing the largest amount amongst GCC central banks. CBQ raised $14.29 billion through 25 issues, representing 44.48 per cent of the total CBLI amount. The CBK raised $13.29 billion through 37 issues, an increase of 7.87 per cent from $12.32 billion raised through 34 issuances in H1 2013. GCC Bonds and Sukuk Market The GCC bonds market is composed of sovereign and corporate bonds and Sukuk issuances denominated in local and foreign currencies. A total of $24.57 billion was raised by Sovereign and Corporate bond and Sukuk issuances in H1 2014, an increase of 2.09 per cent from the total value raised in H1 2013.

Geographical Allocation

Issuances by UAE entities raised the largest amount in H1 2014 representing 59.88 per cent of the total amount, or $14.71 billion, and were the most active in terms of issuance frequency with 54 issuances. Saudi Arabian entities raised the second highest amount, $7.35 billion while Qatari entities raised $1.18 billion. Kuwait Projects Company (KIPCO) was the sole corporate issuer from Kuwait, raising $500 million through a conventional bond.

Sovereign Vs. Corporate

During H1 2014, corporate issuances dominated the majority of the amount raised, with $23.82 billion or 96.95 per cent of the total amount raised. Sovereign issuances raised $750 million represented by a single issuance from Government of Dubai.

UAE corporate entities were the leading corporate issuers in GCC during H1 2014 in terms of value, raising $ 13.96 billion through 53 issues followed by Saudi Arabian corporate entities which raised $7.35 billion through nine new issues.

Conventional Vs. Sukuk

Conventional issuances raised $18.02 billion, or 73.34 per cent of the total amount raised in GCC bonds and Sukuk market during H1 2014. This was a substantial increase of 44.31 per cent as compared to H1 2013. Sukuk issuance totaled $6.55 billion in H1 2014.

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