Issuance Of Bonds And Sukuk In GCC Totals $ 37.6 Bn In H1

Kuwait Financial Centre (Markaz), in its recent research report titled GCC Bonds & Sukuk Market Survey, has highlighted the trends pertaining to aggregate issuances in the GCC region during H1, 2012.

The aggregate primary issuance of bonds and sukuk in the GCC totaled $ 37.6 billion in H1, 2012, an 18.7 percent decrease from the total amount raised in during H1, 2011.

The month of June predominated in terms of issuance frequency with 32 issuances; however, May witnessed the highest value as $ 7.3 billion was issued, representing 19.6 percent of the total amount issued, through 28 issuances.

Central Bank of Kuwait raised $ 25.8 billion – 51 percent of the total 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 1 year, to regulate the levels of domestic liquidity. A total of $ 13.8 billion was raised by the central banks of Kuwait, Bahrain, Qatar, and Oman during H1, 2012, with the Central Bank of Kuwait raising the highest amount of $ 6.5 billion, representing 47.2 percent of the total CBLI amount through 14 issuances.

The GCC bonds market, composed of sovereign and corporate bonds and sukuk issuances denominated in local and foreign currencies, a total of $ 23.7 billion was raised by sovereign and corporate bond and sukuk issuances, compared to $ 15.4 billion in H1, 2011.

Sovereign Vs. Corporate: During H1, corporate issuances dominated the majority of the amount raised, with $ 18 billion or 75.8 percent of the total amount raised. Sovereign issuances raised $ 5.7 billion representing 24.2 percent of the total amount raised.

Corporate issuances from the UAE continued to dominate the market in terms of issuances at 49, representing 70 percent of the total number of issuances, raising a total of $ 7.3 billion.

The sovereign issuances valued at $ 5.73 billion in H1 compared to $ 1.59 billion in H1, 2011; the number of sovereign issuances also rose drastically from three in H1, 2011 to 18 issuances in H1, 2012.

Geographical Allocation: Issuances by UAE entities raised the largest amount in H1 representing 36.4 percent of the total amount, or $ 8.5 billion, and were the most active in terms of issuance frequency with 51 issuances representing 58 percent of the total number of issuances.

Saudi Arabian entities raised the second highest amount during H1, 2012, $ 8 billion representing 33.6 percent of the total amount. Kuwaiti entities raised a total of 4.4 billion through 20 issuances.

Conventional Vs. Sukuk: Conventional issuances represented the bulk of the GCC bonds and sukuk market during H1, 2012, with $ 17.2 billion raised through 77 issues representing 72 percent of the total amount raised and 87.5 percent of the total number of issuances.

The amount raised by conventional issuances increased by 47.6 percent in H1 2012 compared to H1, 2011, the number of conventional issuances increased from 19 to 77 during the period.

It is notable to mention that the amount of sukuk issuances almost doubled in H1, 2012 compared to H1, 2011, from $ 3.71 billion to $ 6.73 billion, through 11 issuances.

Issue Size Profile: GCC bonds and sukuk issuances during H1, 2012 had issue sizes ranging from $ 3.8 million to $ 3.9 billion.

Bonds and sukuk with issue sizes equal to or greater than $1 billion, raised the highest amount at $ 8.5 billion with 5 issuances, representing 36 percent of the total amount of issuances. Issuances with sizes ranging between $ 500 million and less than $ 1 billion raised the second most highest amount during H1, 2012 at $ 7.6 billion, with a total of 13 issuances.

Arab News