International demand for GCC bonds is expected to receive a large boost in 2019 as a result of the inclusion of five GCC sovereigns in the JP Morgan Emerging Markets Bond Index (EMBI).
Sunday 26, May 2019 BY KUDAKWASHE MUZORIWA
The National Bank of Kuwait (NBK) said that GCC bonds and Sukuk issuance surged by $32 billion in Q1 2019, lifting outstanding debt in the region to $478 billion.
Dr. Saade Chami, NBK’s Group Chief Economist, said, “Issuance of bonds by GCC sovereigns and corporates is expected to grow in 2019, as a result of largely expansionary budgets and refinancing needs arising from maturing debt.”
A sharp rise in regional debt issuance in Q1 2019 was driven by low borrowing costs, good credit ratings and a strong appetite for regional bonds among international investors.
Policymakers across the region are establishing regulation to improve debt management, increase transparency as well as market access and availability of timely information.
The UAE introduced a new debt law and a debt management office last year, while in Saudi Arabia, the Tadawul launched bond and Sukuk trading.
“The region could receive as much as USD 30 billion in fund inflows, with most being allocated to larger debt markets such as Saudi Arabia,” said Dr. Chami.