22/10/2017 06:24 AST

GCC debt issuance picked up in third quarter of 2017 (Q3, 17) as the typically slower summer season came to an end. Activity remained predominantly in the public sector.

Total new issuance amounted to $24bn compared to $21bn in Q2,17. Private sector activity continued to weaken in third quarter, with the share of sovereign issuances up to 94 percent. Total outstanding debt was up a healthy $20bn, to rest at $415bn.

After reaching a high of 3.3 percent on the back of the blockade, yields on Qatar’s bonds maturing in 2021 fell to 2.8 percent at the close of Q3. Yields on Omani paper maturing in 2021 also declined in the third quarter to end at 3.5 percent after having reached 3.9 percent in the previous quarter following the sovereign’s downgrade to below investment-grade by S&P, NBK’s ‘Debt Market’ report noted.

Sovereign activity was strong during 3Q17 with $23bn in new issuances and the bulk coming from Saudi Arabia. Bahrain tapped international markets for the second time this year with a $3bn issuance. Despite Bahrain having a rating below investment-grade by the three main rating agencies, the offering was well received and almost five times oversubscribed, reflecting the strong appetite and increased attractiveness of the regional debt market. Saudi Arabia and Kuwait issued domestic debt of $11bn and $4bn, respectively.

GCC debt issuance is expected to remain healthy in Q4,17, as sovereigns continue to seek cheap deficit financing in favorable market conditions. In early October Saudi Arabia raised $12bn in dollar-denominated debt almost a year after its debut international issuance. Abu Dhabi also just completed a $10bn international offering.

International benchmark yields trended downward for most of the quarter as North Korea worries benefitted safe haven assets. Persistently low inflation in the major economies also continued to put a cap on yields.

However, most yields ended the quarter slightly higher following a more hawkish tone by Fed Chair Janet Yellen and the unveiling of President Trump’s pro-business tax plan late in the quarter.

US government 10-year Treasury yields trended lower for most of 3Q17 but finished 2 bps higher at 2.3 percent.

Tensions with North Korea spurred a generally “risk-off” mode, exerting downward pressure on yields. Demand for safe-haven assets also picked up as hurricanes hit the US coast. But yields recovered shortly after as the impact turned out to be less than was previously feared. Yields took a detour thereafter, pushed higher mostly by the Fed’s more hawkish stance. Towards the close of the quarter, yields shot up as investors digested the latest iteration of Trump’s tax plan and Yellen’s unwavering pursuit of monetary tightening.

Market expectations for a rate hike in December rose to 80 percent from 25 percent just a few weeks earlier following September’s FOMC meeting in which they announced the start of the balance sheet reduction process.


The Peninsula

Ticker Price Volume
QNBK 177.01 129,197
APPC 47.00 985,520
ALMARAI 44.90 1,238,045
SABIC 118.20 7,617,975
SAICO 10.82 126,222
AXA 18.72 276,220
KINGDOM 8.03 174,277
Qatar’s trade volume with Germany and Italy at QR18.97bn

16/10/2018

Qatar’s economic and trade cooperation with Germany and Italy is expected to witness a major boost in the coming years. All the stakeholders, including top government officials and business leaders f

The Peninsula

Strategy to enhance gas allocation for industry

16/10/2018

Oman’s authorities have pledged to increase the allocation of natural gas — as feedstock and fuel resource — for industrial and economic investments in line with the government’s vision to enhance no

Oman Daily Observer

UAE digital health start-ups raise $11.5b in 2017

16/10/2018

Arab Health, an exhibition for healthcare and trade professionals in the Mena region, has outlined the role of tech start-ups in playing a more vital role in the healthcare industry in areas such as

The Gulf Today

Technology keystone of UAE vision: VP

16/10/2018

Vice President and Prime Minister of the UAE and Ruler of Dubai His Highness Sheikh Mohammed Bin Rashid Al Maktoum said that technology is key to realising the UAE’s future vision to harness innovati

The Gulf Today

Dubai residential market 'under pressure' in Q3

16/10/2018

Dubai’s property pipeline is expected to exert continued pressure on the residential market with an additional 10,000 units set to be delivered this year and a further 70,000 before Expo 2020 - accor

Trade Arabia