As business activity picks up after the summer, we offer a summary of some of the stories we're following at the Arab Bankers Association.
MENA fixed income issuance rises to $106 bn in 2015 on Saudi bonds
Total fixed income issuance in the MENA region was $105.7 bn during 2015, of which Egypt accounted for $33.8 bn and Saudi Arabia $30.6 bn, according to a new report by Kamco, the Kuwaiti investment company.
Egyptian issuance was up from $24 bn in 2014, while Saudi Arabia issued no fixed income debt in 2014.
Other MENA issuers were the UAE ($9.2 bn in 2015), Jordan ($6.8 bn), Bahrain ($5.4 bn), Kuwait ($5.2 bn), Qatar ($4.3 bn), Lebanon ($3.3 bn), Oman ($3.1 bn), Morocco ($2.5 bn), Tunisia ($1.2 bn) and Algeria ($0.1 bn).
Sovereign issuance accounted for 85% of total issuance, with corporate bonds taking nearly all the remainder. Quasi sovereigns accounted or 1% of MENA issuance.
Within the GCC, $58 bn of convential bonds were issued and $18 bn of sukuk. Annual issuance of both bonds and sukuk has been around $20-25 bn each since 2011, So the Saudi issues in 2015 completely changed the profile of the MENA fixed income market.
Globally, sukuk issuance declined to $63.2 bn in 2015 from $103 bn in 2014, mainly as a result of the decision by the Central Bank of Malaysia to move away from sukuk issuance as a liquidity management tool for its domestic Islamic banks. (It had found that its sukuk were being bought by overseas investors, rather than domestic banks for whom they were intended and so has developed alternative liquidity instruments designed solely for the domestic market.) Malaysian issuance fell to $32.2 bn in 2015, compared to $64.9 bn the previous year.
Indonesia was the second biggest issuer market for sukuk in 2014 ($7.9 bn), followed by Saudi Arabia ($6.4 bn), the UAE ($5.3 bn), Bahrain ($3.5 bn), Qatar ($2.2 bn), Turkey ($1.8 bn) and Hong Kong ($1.0 bn).
As a result of the changes in Malaysian issuance, sovereigns accounted for only 44% of sukuk in 2015 (compared to 61% in 2014), with quasi sovereigns representing 22% of corporates 34%.
The Kamco report is four pages long and contains numerous tables and graphs that are easy to read. It is attached below.
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